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Last Updated : 2024-05-19 15:58:00
5 July 2023 06:03 am - 18 - {{hitsCtrl.values.hits}}
* Nine percent interest assured on EPF bonds
*That is anyway interest paid on average in the past
*As a result, DDR impact on contributions minimum
Despite the government having secured the parliamentary passage of the Domestic Debt Restructuring (DDR) programme, the opposition parties continue to make criticism and witticism about its impact, real or perceived, on contributors to the Employees’ Provident Fund (EPF) and the Employees’ Task Fund (ETF).
In the implementation of DDR, the government has excluded the country’s financial sector, mainly represented by banks and non-bank financial institutions since they are already subject to an effective tax rate of over 50 per cent. As such, it is clear that DDR will have no impact on the banking sector and its depositors. However, there is a limited impact on the EPF and the ETF. A concerted effort is now underway by the parties in the opposition to rally people against the DDR over this aspect.
Foreign Affairs Minister Ali Sabry who addressed the media on Monday said DDR was not a popular move, and somebody had to make a sacrifice somewhere in the greater interests of society. He said the government had acted in a manner with the least minimum bearing on people.
In the whole process, the government is going to restructure treasury bills and bonds held by commercial banks and pension funds. The opposition’s criticism centres on the fact that only the pension funds have been targeted.
Commenting on DDR, Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva charged that the principle of equitable burden sharing had been violated.
“We have been now told that the amount to be restructured in terms of bonds is only 0.5 percent of Gross Domestic Product (GDP) which is quite small. Then it could certainly have been possible to share the burden among all bond holders. There would have been no significant impact on banks and other creditors if light regulatory forbearance was applied. Another issue is while foreign ISB (International Sovereign Bond) holders have the benefit to disagree with the proposed restructure of their holdings based on what are called collective action clauses, and seek a better deal for themselves, who will argue on behalf of 2.5m members of the EPF and ETF given there are no such clauses,” he said.
He said his party requested that the EPF and ETF to undertake a comprehensive analysis of the potential impact of the proposed restructure to the members.
“As SJB, we argued that the EPF and ETF Acts should be amended to guarantee a minimum rate of return. This can be done in multiple ways - a minimum nominal return (as per the 1958 Act), a variable rate based on inflation, or the application of a weighted average market rate that is to be paid out to the other bond holders until 2038,” he said.
Responding to these allegations, State Minister of Finance Shehan Semasinghe said the opposition was trying to prevail upon people to withdraw their money from the banking system, but it failed because the government did not have a haircut on deposits.
Asserting that there is no impact on the contributions to the EPF and ETF, he said a 9 percent interest had been guaranteed on returns of bonds.
“Had we done a haircut on deposits, it would have affected depositors. We did not do it. We have assured a 9-percent interest rate on EPF, ETF investments on bonds. We are planning to bring down the inflation to a single digit level. Then, the ensured interest rate on bonds will be sufficient,” he said.
He also said there would be no room for another bond scam.
“We won’t favour anyone,” he said.
The EPF, as the largest superannuation fund, paid only 9 percent interest on average in the past too. Therefore, the DDR impact on contributors will be minimum. (Kelum Bandara)
Jude Wednesday, 05 July 2023 06:34 AM
Give us the extent of impact to EPF AND ETF.. mind you This is the same bunch bankrupt this country,!! More than opposition the people were crying because for a while this country was living hell, no food, no water no electricity no fuel no gas no milk powder no medicine and still HALF of the population living on one meal a day!!
Citizen Kane Wednesday, 05 July 2023 06:43 AM
With such an intelligent person as State Minister of Finance, it is no surprise that our nation is in this predicament
Jude Wednesday, 05 July 2023 06:45 AM
9% interest rate absolutely NO good when considering inflation in May 2023 is 25.2% the EPF AND ETF Real Rate of Returns is Minus -16.2% yeah!!
Jude Wednesday, 05 July 2023 06:50 AM
EPF AND ETF assured 9% but The problem is inflation in May 2023 is 25.2% that means Real Rate of Returns are Minus -16.2%. Hey 9% return to EPF AND ETF Huh කොන්ඩේ බැඳපු චන්නුන්ට ඕවා කියාපන් !!!
Jude Wednesday, 05 July 2023 06:52 AM
DDR gonna be The air we breathe!! It's gonna be part of Life, get use to it.
Christo255 Wednesday, 05 July 2023 06:53 AM
The main problem is that Sri Lankans will believe anything the politicians say. People should start thinking independently without being political slaves who lap on to anything the voice cut heroes say on news broadcasts. Government is doing everything well so far.
Mahendra Fernando Wednesday, 05 July 2023 07:54 AM
Instead of telling us what he said or she said, research and tell us the impact.
Johan Wednesday, 05 July 2023 07:57 AM
ETF means Employees Trust fund not Task Fund
K. Ranaweera Wednesday, 05 July 2023 09:02 AM
Even though minimum it clearly implies there is an impact on EPF and ETF..
Rajaratnam Wednesday, 05 July 2023 09:09 AM
29% to Central Bank EPF. Inflation >50%.Private sector working class robbed by 9%. Business class gets huge profit but not touched. 1st Central Bank Robbery. Now EPF Robbery, aided and abetted by corrupt Pohottuwa MPs.
Wedamahaththaya Wednesday, 05 July 2023 09:41 AM
Any pension fund must be governed by board elected by the members representatives. THEY ARE THE PEOPLE WHO SHOULD MAKE SUCH DECISIONS. Not those appointed by corrupt bureaucrats. Governments has not provided the Net Present Value of the EPF and the loss according to Mr Sumanthiran is 48%.This is stealing from the EPF. EPF is the easiest chunk of money exploited by the corrupt. If not for the infamous bond scams members should have received far more than 9%.
Mohan Wednesday, 05 July 2023 09:47 AM
If they are going to pay 9% on EPF which is already the rate, then how are they going to save? Somebody please explain.
Ranjith Wednesday, 05 July 2023 11:00 AM
Entire private sector employees are crying foul why is this government always putting the burden and pressure on poor people and private sector employees ,government are still not able to minimize corruption trying coverup all their mistakes by borrowing
Kamal Samarasinghe [Health Ministry Staff] Wednesday, 05 July 2023 11:38 AM
It is clear that Ranil Rajapakshes Government has already planned to touch the EPF/ETF money earned by the poor masses. Once, they start implementing, the entire nation will get out to the roads and do the same thing to RW
Do Doo Dooo Chin Wednesday, 05 July 2023 11:40 AM
We have spies in all the Govt. Departments - if EPF money is touched, the next Aragalaya will start for sure. Ranil be aware..
Lal Palitha Wednesday, 05 July 2023 11:43 AM
First, we will deal with all the dirty dish washing MP's and Ministers who voted for this dirty act, better they find another safer shelter.
Ranjith Wednesday, 05 July 2023 03:55 PM
I know as a private sector employee what I got after my retirement working for 40 years now it is advisable to have a retirement plan top of EPF ,ETF and Gratuity but with severe lost to Superannuation if we implement IMF proposals private sector employees will get penuts after they retire only option available is to continue to work even after retirement till you died our politicians do not care for the people
G. Anton Mcdonald Thursday, 06 July 2023 08:14 AM
If the Govt do away with provincial councils cutdown expenses by not giving permits to duty free vehicles, free perks, reduce the no of secretaries to each MP's, reduce the no of vehicles, Levi charges for meals in Parliament and reduce the no of guards DDR is not needed. We could easily manage your affairs. These are the stupid rules established by Executive Presidency by JRJ, father of destruction.
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