“It is believed that the EPF has lost a staggering Rs.12 billion at the stock market. The scale of loss is a cause for concern. A full explanation is called for on each of the transactions,” the union said in a letter to Minister of Labour and Labour Relations, Gamini Lokuge
Referring to the administration, management and investment of EPF funds, the CFL said they were thankful to EPF Superintendent at the Central Bank, Kalyanee Gunathilake making a presentation to the National Labour Advisory Council (NLAC) on July 2 on the current state of affairs of the EPF. A copy of this letter has been sent to Ms Gunathilake
“However, all matters connected with EPF investments in the stock market were not clarified by the official concerned to the satisfaction of the worker members in the NLAC and, at your request, the unions agreed to forward their queries to the head of EPF Department in the Central Bank through your Ministry,” the letter said.
“In our view, there are several serious matters”, it said. The union raised several concerns including the Auditor General raising several serious accounting deficiencies and management inefficiencies (over EPF management); the many speculative investments in the market bringing a low rate of return to the members of the fund; the rate of return declining to 12% in 2011 from 15% of the previous year; need for fund managers to explain the reason for the decline; interest paid to member’s balances declining to 11.5% in 2011 from 12.5% in 2010; increasing tendency by fund managers to come to the rescue of the stock market whenever it falters which is not the objective of the EPF, etc.
The CFL said the administration of the EPF by the Department of Labour and its financial management by the Monetary Board of the Central Bank needs a serious review so as to bring about more transparency and accountability to the affairs of the EPF.
The union proposed that:
1. Administration of the EPF
The Secretary to the Ministry should submit quarterly reports to the NLAC so that EPF administration can constantly be monitored and streamlined.
2. Management of the Fund
Need for tight control over such investments is emphasized. The CFL proposes a monitoring mechanism with trade union representatives drawn from the NLAC to monitor all matters relating to the appropriation and investment of EPF monies by the Central Bank /Monetary Board. “We wish to point out that such a mechanism was proposed earlier when a composite plan was drawn up by the Department of Labour to amend the EPF Act.”
The CFL said this is the only sure way to defeat the ‘subterranean plots of interested lobbies both local and foreign to get management of the Rs. 1 trillion worth EPF that belongs to the workers.”