EPF achieves Rs. 900 billion milestone in 2010

The Employees’ Provident Fund (EPF) has recorded another year of noteworthy performance in 2010, according to the Central Bank.

During the year, member contributions rose by 12.5% and the number of active members of the fund increased by 9.5% reflecting the increased new employment opportunities in the economy.

EPF received Rs. 54.8 billion as member contributions and paid-out Rs. 34.9 billion as refunds to the members and their legal heirs in 2010. The gross income of the fund was Rs. 121.3 billion, which was 10.6% higher compared to that of the preceding year.

The fund’s investment policy continued to be focused on long-term positive rate of real return to the members while ensuring the safety of the fund. Accordingly, more than 94% of the funds have been invested in Government securities, as a result of which interest income and amortisation gains were the main sources of income to the fund.

During 2010, EPF earned Rs. 118 billion from its investments in Government securities.

EPF also invested Rs. 32 billion in the equity market during 2010, which recorded substantial gains under the sustainable peaceful conditions, better corporate earnings, and more favourable economic prospects in the country.

Hence, equity investments which represented 1.3% of the total EPF portfolio at end 2009 increased to 5% by end 2010.

EPF’s key focus was on fundamentally sound stocks in the banking, finance and insurance, hotel, travel and diversified sectors. With the revival of the Sri Lankan economy, these sectors are expected to flourish in the medium to long term.

Consequently, EPF was able to generate just over Rs. 1.5 billion in realised gains, and further Rs. 16.2 billion in unrealised gains from its equity portfolio. Since major portion of the EPF’s equity investments are held in the long term portfolio, further substantial gains are also expected to be realised in the future.

By end 2010, the total value of the fund reached Rs. 900 billion, registering a growth of 16.9% over that of 2009. At the same time, EPF has been able to appropriate an interest rate of 12.5% on the year-end member balances, which is a very attractive rate under the current low interest rate environment.

During 2011, the total value of the fund is expected to surpass the Rs. 1,000 billion (Rs. 1 trillion) mark through its income from investments and member contributions.