EPF to pension: Labour Ministry says no change to EPF system

In the wake of concerns raised by trade unions (TUs) over reports the Employees’ Provident Fund (EPF) may be converted into a pension scheme, the Labour Ministry stated there is no plan to make any immediate changes to the existing system and that it would continue to operate as it does now.

Speaking on the matter to The Daily Morning, the Ministry Secretary, S.M. Piyatissa said that discussions on converting the EPF into a pension system have taken place for many years, and that some TUs themselves have requested such a move. However, he said this is not something that can be done within a short period of time. “This cannot be done in a month or two. It is a long process. Proper studies have to be carried out before any decision is taken,” he said, adding that there is no plan at present to introduce any changes.

TUs have raised objections to recent reports suggesting the Government plans to convert the EPF into a pension scheme, warning that such a move could weaken workers’ control over their own savings. Union leaders have said they are not opposed to pension schemes in principle, but strongly reject any compulsory linking of the EPF to such a system, pointing to previous attempts that were withdrawn following protests. The Free Trade Zones and General Services Employees’ Union General Secretary Anton Marcus recently told The Daily Morning that a similar proposal was made in 2011 and was later withdrawn due to strong opposition from workers. He said that private sector employees were not against a pension scheme, but opposed the use of EPF funds for that purpose. He added that any such scheme should be voluntary rather than compulsory, noting that the compulsory nature of the earlier proposal led to protests.

The EPF, established under the EPF Act, No. 15 of 1958, is the country’s largest social security scheme, with assets valued at Rs. 4.4 trillion at the end of 2024. Employees contribute a minimum of eight per cent of their monthly earnings, and employers are required to contribute at least 12%.

Source - The Morning