Business Times

Investing your EPF contributions in the Colombo stockmarket

Recently the government informed parliament that the Employees Providend Fund (EPF) has invested nearly Rs 27 billion in 76 companies through the Colombo stock market. These investments, it was reported, were in six financial institutions includin banks, hotels, plantation companies, and hospitals.
To many that came as a surprise given the recent crisis in the finance sector where several companies either collapsed or had to be bailed out by the Central Bank (CB).

While one can argue that the CB has authority over all forms of registered banks and finance companies and provides some element of protection against collapse, can the same be said of protective cover over non banking institutions?

The CB or any regulator for that matter has no way of preventing a collapse in a private company. Then, what happens if a listed company in which the EPF has invested, collapses or is in trouble, or is in debt? What precautions are there to protect depositors (EPF members) monies?

These are questions that concern many EPF members whose hard-earned money can be withdrawn, strictly only on retirement apart from the fact that loans can be taken for housing purposes. Furthermore since the EPF is a compulsory fund, members have no right or authority to ask questions or register their concern – about their own money!

True the fund has been a staid institution not able to get a better return for millions of its members. Also true is the need to invest it in securities that provide a better return to members. Yet, are members adequately protected against any investment going sour or have they been asked how their money should be securely invested to get the best return?

Will the CB provide some kind of insurance policy that this won’t happen since the EPF comes under the purview of the banking regulator? Over to you, Governor!

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