There is something about Rs. 5.5 trillion that ought to concentrate the mind.
That is roughly the combined scale of the Employees’ Provident Fund and Employees’ Trust Fund, two enormous pools of money accumulated for the benefit of Sri Lanka’s workers.
The EPF alone holds assets exceeding Rs. 4.9 trillion and covers more than 2.5 million members. The ETF has assets exceeding Rs. 637.5 billion and more than three million active members.
The Government is considering changing how these funds are governed.
Cabinet has appointed a senior officials’ committee to examine whether the functions of the EPF and ETF should operate within a unified governance framework overseen through a tripartite structure representing Government, employers and employees.
That distinction is important. There has not yet been a decision to merge the money in the two funds, and the Government has subsequently stated that the EPF and ETF would remain separate financial entities.
Nor should the proposal automatically be condemned merely because it involves change.
The present arrangements are hardly sacred.
The EPF is presently divided between the Central Bank, which handles custody, investment management, financial administration and payment of benefits, and the Labour Department, which deals with registration, compliance, recovery of dues and protection of employee rights.
The ETF already operates under a board containing Government, employer and worker representation.
There may therefore be perfectly legitimate reasons for examining whether the system can be administered better.
But there is an equally legitimate reason why workers are suspicious.
It is their money.
The State did not earn it. Ministers did not save it. Parliament did not accumulate it. It exists because employers and employees contributed towards the future financial security of workers.
That distinction should govern everything that follows.
The Government says tripartite governance reflects internationally accepted practice. Fine.
Then let us have international standards of transparency too.
Publish the committee’s eventual report. Publish the proposed governance structure. Tell workers who will appoint the directors, what qualifications they must possess, how they may be removed and what conflicts of interest will disqualify them.
More importantly, explain who will control investment decisions.
That is where the real power lies.
A board may contain representatives of Government, employers and employees and still provide inadequate protection if those controlling trillions of rupees can direct investments without rigorous fiduciary duties, professional investment criteria and public accountability.
The debate should therefore not descend into the convenient simplicity of Government versus trade unions.
The unions protesting yesterday have every right to raise the alarm. They do not, however, acquire a veto merely because they represent workers. Nor does Government acquire superior wisdom merely because Cabinet has approved a study.
The test is much simpler.
Which arrangement best protects the beneficiaries?
Sri Lanka should be particularly cautious because a workers’ retirement fund of this magnitude inevitably attracts interests other than those of the workers themselves.
Rs. 5.5 trillion is not merely a retirement fund. It is an extraordinary concentration of investible capital.
Governments can see financing.
Businesses can see investment.
Financial institutions can see opportunity.
Workers see something altogether different.
They see their retirement.
That is why any new structure must contain protections capable of surviving not merely this Government but every Government that follows it.
There should be clear fiduciary obligations. Investment decisions should be professionally made. Related-party transactions must be tightly controlled. Conflicts must be disclosed. Accounts and investment performance should be published. Independent audit should be mandatory and parliamentary oversight should never become political control of investment decisions.
Above all, the beneficiaries must be able to see what is being done with their money.
This Government may genuinely believe that a new governance structure will improve the EPF and ETF.
If so, it should have no difficulty proving it.
Put the proposal on the table.
Let employers examine it. Let economists examine it. Let investment professionals examine it. Let trade unions examine it.
And let the millions of Sri Lankans whose money is actually sitting in those funds examine it too.
Reform should not frighten us.
Secrecy should.
Because whatever administrative structure ultimately emerges, one principle should remain immovable.
The EPF and ETF are not convenient reservoirs of State capital.
They are the workers’ money.
And the workers have a right to know exactly who is going to have their hands on it.
be that as it may
The factual foundation is unusually strong here. Cabinet itself records EPF assets exceeding Rs.4.9 trillion and ETF assets exceeding Rs.637.5 billion. It says the study is into a tripartite Government-employer-employee structure with full legal and financial protection for members’ assets. Trade unions nevertheless protested on September 2 over what they see as the risks of changing control of the funds.
