Lokuge’s take on controversial EPF Amendment Bill

The controversial Employees Provident Fund (EPF) Amendment Bill will be presented to Parliament on 18 January. Minister of Labour and Labour Relations Gamini Lokuge points out that there are no hidden agendas behind the bill and it was unanimously agreed during the tripartite meeting to go ahead with the amendments.
However, he admits that the Government will remove Section 5 of the bill relating to the insurance or pension scheme, due to heavy protest by members. Following are excerpts from the interview:

Q: Why did the Government decide to bring in the Employees Provident Fund Amendment Bill?

A: There is a big hue and cry about this amendment bill. This was not a sudden decision. This amendment was prepared when former Labour Minister Athauda Seneviratne was in office. It is a well known fact that EPF members can mortgage their funds and obtain loan facilities. At least 60% to70% employees have obtained this loan.
In this loan there is a clause that if any member does not pay the instalment before 31 March every year, the arrears must remit to the bank from their accounts. It is pathetic that most members do not have much money in their accounts when they retire because the bank over dues and compound interest are deducted from their funds. It is useless having the EPF due to this very same reason. Therefore, there was request from members to provide a solution to overcome this situation.
Minister Seneviratne following having discussions with members and the trade unions came to a decision that any member who has an account for more than 10 years and a balance of Rs. 300,000 will be eligible to obtain 30% from their funds. This was without interest. The members could use this money to either settle their loans or for whatever desired purpose. This was the main purpose of bringing the amendment bill.
Secondly, most EPF members have multiple accounts. We have started a programme where members are given only one number. We use the National Identity Card number and thumbprint of the member when issuing this number. If any member wishes to check his balance, he could easily do it using the thumbprint. Under this programme they will get a balance statement every month.
Thirdly, according to this amendment every company that has over 50 workers should send their statements every month. At present they do it every three months. Meanwhile, the penalty fee for defaulted companies has been increased from the amendment act.
The last purpose to bring the act is to build ‘Mehewara Piyasa’. We have a number of offices in various locations. And we pay a large amount of money as rent. By having a separate building for EPF and ETF, we can bring all these institutions, labour courts and departments under one roof and also save the money that is spent as rent. We decided not to obtain a bank loan to construct this building but to use EPF money instead.  Lastly, in the ‘Mahinda Chinthana’ programme, there is a proposal for a private sector pension. We proposed to get approval from the EPF Act to organise pension or an insurance scheme. But there is a lot of agitation about this pension or insurance scheme. So we have decided not to go ahead with that. We will remove this clause. We have already got approval from the Attorney General. On 17 January we will inform Parliament that this clause is removed from the act.
Q: EPF and ETF funds belong to the people. How ethical it is to use such money for the Ministry’s purposes, such as to put up new buildings?
A: Did we ever say this money belongs to the Ministry? Of cause we very well know that this is the people’s money. Everyone is raising a voice against putting up this new building.
 What they need to know is that we are already paying a massive amount of money as rent for the present buildings. Therefore, constructing a building is more of an investment. It is the opposition that is making various allegations against this amendment act. They are opposing each and every act of the Government.
I don’t care what the opposition thinks about this bill. The opposition doesn’t care about the people – all they want is to topple this Government.
All I want to say is that there are no hidden agendas behind the amendment bill. At the tripartite meeting, everyone unanimously agreed to go ahead with this act.
Q: Why can’t the Government consult stakeholders and get their opinion when bringing important bills like this?
A: We have already discussed this with the Employees Federation of Ceylon. Since Minister Seneviratne initiated these amendments, we have had five or six discussions with them. The last discussion was held last week. Therefore, no one can say that we haven’t consulted the stakeholders when bringing this act.
These opposition parties that hold press conferences pointing fingers at us must first talk to their trade unions and get a clear idea about what is going on. There was representation from all opposition party trade unions. They all agreed to this act except for the insurance or pension scheme. We have agreed to remove that clause and go ahead with the act.
Q: There are various allegations against investing EPF and ETF funds in the stock market. How do you counter these accusations?
A: Although we collect the money, the EPF and ETF funds are under the Monetary Board. They are the decision makers for investment and this has been the practice since 1957.  When we need to pay members, the Central Bank releases that money without any delay. I am pleased to say that we haven’t had any issues so far. They pay us a good interest for that money too. Because of this, ETF is today a trillion rupee fund.
Q: What do you have to say about the accusations that the 2010 annual report of the ETF has not been published yet?
A: It will be published soon. The Auditor General sent us a copy of the report on 4 January. It is in print at present. We were trying to table the report before 17 January. However, before the end of this month we will publish the annual report.
Q: What is happening to the private pension bill?
A: There is no such thing called the private pension bill. The Government clearly stated that we have withdrawn the bill. So people should not worry about that bill anymore. We don’t have any desire to implement this bill. If a union requests we will consider such decision. But so far there is nothing like that.
Q: But it has not been removed from the parliamentary order book?
A: This is how it works. We have tabled the bill. Once the sessions are over it will be removed automatically. There are lots of bills like that. Why does everyone keep talking only about this bill?