Treasury gets control of semi-Govt. EPF

The Treasury has moved to take control of government and semi-government managed provident fund accounts including the Ceylon Electricity Board (CEB) fund of Rs. 17,000 million saying that default by such funds will have a contingent liability on the government.

The decision was announced at a meeting Treasury Secretary P.B. Jayasundara and Treasury Operations Director General Lalith de Silva held with Fund Managers of the respective provident funds including the Peoples’ Bank, Bank of Ceylon, National Savings Bank and the CEB where they were instructed on how to invest the monies of these funds.

Among the instructions issued to fund managers was that funds should not be transferred from one state bank to another, call for only a single quotation from a state bank for purposes of investment and to invest only in Treasury Bills and Treasury Bonds. This move was bound to hamper the monies being invested in markets at competitive rates which would have brought maximum benefit to the employees of the respective institutions.

The Fund Managers have also been told to make available to the Treasury Operations DG a monthly cash flow report of each fund for this year. Mr. de Silva told Sunday Times the Fund Managers of government-assisted institutions were advised to strictly follow the instructions given to them, but he declined to disclose the total sums in the provident funds.

“It’s public money and the government is responsible for it. That’s the reason to ask Fund Managers to invest the funds in state banks. There are some organisations which have already deposited the money in state banks but there are some others who have not done so”, he said.

Mr. de Silva said one of the main objectives of this exercise was to provide more security for the funds. However, members of these provident funds have raised concern over the move by the State to take control of these funds. The CEB provident fund, which had a sum of Rs. 17,000 million had been in operation since 1969 and was audited by private auditors. The Sunday Times learns that at the discussion Mr. de Silva had said the CEB Provident Fund was a pension fund indicating the limited options they had over the fund. However this was contradicted by the Treasury Secretary who said it did not matter whether it was a pension fund or not but that the instructions given to them should be followed.

Of the Rs.17 billion in the CEB provident fund, 90% is invested in treasury bills carrying an interest rate of 21%, some in treasury bonds carrying an interest rate of 18.7% and the rest in the Housing Development and Finance Corporation paying an interest rate of 18%.

A senior CEB employee said the provident fund would be restricted in its options when investing its money and the efficiency in investments if the government took control and placed restrictions on investments. By this fund, a CEB employee could expect a return of 13.5 %, housing loans of up to Rs. 4 million which are processed within 7 days. Meanwhile an NSB officer said the Bank’s provident Fund amounted to Rs. 2,800 million.