The Central Bank today announced plans to revise the investment guidelines related to the Employees’ Provident Fund (EPF) to diversify the investment portfolio of Sri Lanka’s largest superannuation fund under the current low interest rate environment.
“The intention is to facilitate a more prudent investment decision making process, while strengthening the existing internal control environment. We expect to rebalance the investment portfolio to generate a high risk adjusted rate of return compared to market rates, while seeking alternative investment avenues to diversify the investment portfolio given the current low interest rate environment,” the Central Bank Governor Prof. W.D. Lakshman said.
As per the current investment policy, the EPF Department of the Central Bank is authorized to invest in Treasury bill and bonds issued by the government, corporate debentures and trust certificates, equities, fixed deposits, commercial papers, reverse repurchase agreements, Standing Deposit Facility (SDF) and cash, subject to certain restrictions.
The investment portfolio of the Rs.2.54 trillion fund consisted of 93.8 percent in government securities and 3 percent in equity,
At the end of 2019, the investment portfolio of the Rs.2.5 trillion fund consisted of 93.8 percent in government securities and 3 percent in equity.
The yields on government securities came down to historical low levels during the 2020.
The fund’s declared interest rate on member balance fell to 9.25 percent in 2019 compared to 9.5 percent in 2018.