Central Bank to diversify the EPF investment portfolio
Sri Lanka's Central Bank plans to diversify its massive private sector retirement fund, Employee Provident Fund (EPF), to maximize returns in the projected future low interest rate environment.
The Central Bank in its policy direction and work plan for the new year "Road Map for Monetary and Financial Sector Policies for 2015 and Beyond" says the EPF would continue to implement diversification strategies to maximize returns.
With a current asset base of Rs. 1.3 trillion, the EPF, which is maintained by the Central Bank, is the largest social security scheme for the employees of institutions and establishments of the Private Sector, State Sponsored Corporations, Statutory Boards and Private Businesses.
The Bank expects with easing monetary conditions, fiscal consolidation and low volatility of inflation, market interest rates to remain low and therefore it will be challenging for the EPF to generate high returns in the medium to long term unless it is diversified.
Accordingly, the fund administrators plan to systematically continue to diversify the fund's investment portfolio in order to provide better returns to its members.
Investments in foreign currency denominated instruments and increased participation in secondary market activities have been proposed as diversification strategies.
"Fund management efficiency would be increased with in-depth analysis of investments, in compliance with the internal rules and improved risk management," the Road Map noted.
To further improve its services, the administration plans to provide remote access to information by all the 15 million subscribers through bank ATMs, Web, and Mobile media eliminating the need for members to visit Colombo for EPF services.
