The National People’s Power (NPP) government’s proposal to establish a unified tripartite governance framework for Sri Lanka’s Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) is being promoted as a long-overdue administrative reform. Officials argue that integrating governance structures will eliminate inefficiencies, improve digital record management, and align Sri Lanka’s social security system with International Labour Organization (ILO) standards.
However, beneath the government’s reform narrative lies growing suspicion from trade unions, economists, and opposition parties that the proposal could fundamentally reshape control over more than Rs. 5.6 trillion in workers’ retirement savings.
At the centre of the controversy is the EPF, currently managed and invested by the Central Bank of Sri Lanka under the EPF Act. Critics warn that transferring strategic oversight to a new tripartite board could gradually weaken the Central Bank’s institutional independence while increasing political influence over investment decisions.
The EPF remains the country’s largest institutional investor and one of the government’s biggest purchasers of Treasury securities. That reality has fuelled allegations that the restructuring may ultimately provide future administrations with greater flexibility to channel workers’ savings into financing government debt or easing fiscal pressures.
The government has categorically rejected such allegations.
Labour Minister Dr. Anil Jayantha Fernando and Deputy Minister Mahinda Jayasinghe insist that there is no proposal to merge the financial assets of the EPF and ETF. According to the government, only administrative systems, databases, and governance mechanisms will be integrated, while both funds will continue operating as legally separate entities.
Officials also argue that fragmented databases have left billions of rupees trapped in unidentified accounts, delaying payments to thousands of retiring workers. They contend that a unified governance model will improve efficiency without compromising fund ownership.
However trade unions remain unconvinced.
Union representatives argue that the proposed framework could undermine statutory protections embedded in the EPF Act of 1958 and the ETF Act of 1980. They maintain that the two institutions were created for fundamentally different purposes the EPF as a retirement savings scheme and the ETF as a welfare fund providing insurance and healthcare benefits during employment.
Another major concern centres on representation. Although the government promises equal participation from employers, employees, and the State, unions argue that government-appointed representatives and employer organisations could effectively dominate board decisions, leaving workers without meaningful control over their own savings.
Opposition parties have also questioned whether the proposal revives earlier reform blueprints advanced by previous administrations. Some analysts believe a unified governance structure could eventually pave the way for a single national pension system, fundamentally altering the distinct benefits currently available under the ETF.
The government has appointed a Senior Officials’ Committee with a three-month mandate to examine the feasibility of the proposed governance framework.
Its findings are likely to determine whether the reform proceeds—or whether mounting public pressure forces a reconsideration of one of the most significant institutional changes ever proposed for Sri Lanka’s worker-managed retirement funds.
By Special Correspondent