EPF assets cross Rs. 5trn mark, but returns moderate

The Employees’ Provident Fund (EPF) reached a significant milestone in 2025 as its total asset base crossed the Rs. 5 trillion mark, representing a considerable expansion from the Rs. 4.4 trillion recorded at the end of 2024. This growth further cements the fund’s position as the largest superannuation fund in the country and a critical pillar of the domestic financial system.

Despite the robust growth in the overall asset portfolio, the returns distributed to contributors have experienced a slight moderation. 

The Central Bank of Sri Lanka, which manages the fund, expects to declare a 10.75 percent interest rate on member balances for 2025, pending the concurrence of the respective ministers. This reflects a marginal decline from the 11.00 percent return declared in 2024, highlighting the challenges of maintaining high yields in a shifting economic landscape.

To navigate these market dynamics and enhance risk-adjusted performance, the Central Bank executed a strategic portfolio rebalancing throughout the year. The fund diversified its investments by increasing exposure to corporate debentures and ESG-themed bonds, alongside taking a more proactive approach in the listed equity market. 

This strategy allowed the fund to capitalise on bullish market trends while systematically divesting from underperforming assets to ensure long-term sustainability.

However, the fund’s management structure continues to draw scrutiny from market observers. 

The Central Bank plays a dual role, acting as both the manager of the EPF and the primary regulator of the country’s banking and financial sector. Some industry stakeholders view this structure as a fundamental conflict of interest, a concern amplified by recent financial sector vulnerabilities, including high-profile incidents such as the NDB scam, where regulatory oversight and market stability come into sharp focus. (NF)