EPF grows by 12.4% in 2012 to Rs. 1.14tn

By The Nation

The portfolio value of the EPF, which represents 13 per cent of the total assets of the financial sector, surpassed Rs.1 trillion in 2012, the Central Bank said. As at end December 2012, the value of the EPF was Rs.1,144 billion with 2.25 million active members of the Fund. There were 12 million non-contributory accounts which are accounts of members under their previous employers.

The EPF is administered by the Commissioner of Labour, while the responsibility for the management of the Fund lies with the Monetary Board of the Central Bank.

According to the Central Bank, the investment income of the Fund during the year ending December 2012 was Rs.121.4 billion. As at end December 2012, the investment portfolio consisted of government securities, which accounted for 91.5 per cent of the investment portfolio, equity, which accounted for 5.4 per cent of the investment portfolio, corporate debt, which accounted for 1 per cent of the investment portfolio, and reverse repos.

“The effective rate of return on member balances was 11.5 per cent for the year 2012,” the Bank said.

Total contributions in 2012 increased by 13.4 per cent to Rs.70.2 billion, while the refunds increased by 3.0 per cent to Rs.48.7 billion, resulting in a net contribution (contributions minus refunds) of Rs.21.5 billion,” the Bank disclosed.

In 2012, total assets of the EPF increased by 12.4 per cent to Rs.1,144 billon while the total investment portfolio of the EPF amounted to Rs.1,105.5 billion.

In comparison, the Unit Trust Industry which had 29 per cent of its investments in equities and 18 per cent in government securities recorded a weighted average return of 1.96 per cent for the year 2012.

Meanwhile, the ETF, which accounted for about 1.8 per cent of the assets of the financial sector, witnessed an increase in its asset base with increased net contributions, despite a slightly negative growth in gross income. The gross income of the fund declined by 10 per cent during the year to Rs.13.9 billion. The ETF had a value of Rs.158 billion as at end December 2012, and has about 9.8 million accounts, of which, about 2.2 million are active.
http://www.nation.lk/edition/biz-news/item/17334-epf-portfolio-exceeds-a-trillion.html

Just out of curiosity, what happens to the money that is not claimed by employees?
For an example, if an employee who has no family members to claim suddenly passes away.. What happen to the money?
I would think there would be a large number of such accounts..

gamaya wrote:Just out of curiosity, what happens to the money that is not claimed by employees?
For an example, if an employee who has no family members to claim suddenly passes away.. What happen to the money?
I would think there would be a large number of such accounts..

Yanne koheda? Malle pol!

bullrun wrote:

gamaya wrote:Just out of curiosity, what happens to the money that is not claimed by employees?
For an example, if an employee who has no family members to claim suddenly passes away.. What happen to the money?
I would think there would be a large number of such accounts..

Yanne koheda? Malle pol!

Well, it's relevant to me.

* Workers paid 11.5% return, unchanged from the previous year
* 5.4% of portfolio in Colombo Stock Exchange; earns Rs. 3bn in capital gains, dividends, up 12.6% from 2011

The country’s largest superannuation fund, the Central Bank managed Employees’ Provident Fund (EPF), for which an annual report has not been published since 2010, has grown by 12.4 percent in 2012 to Rs. 1.14 trillion (Rs. 1,144 billion) from Rs. 1.01 trillion in 2011.

The number of member accounts reached 14.25 million as at end December 2012, up 1.8 percent from a year earlier while contributing employers increased by 6.5 percent to 68,771, the 2013 annual report of the Central Bank disclosed.

Total contributions during the year amounted to Rs. 70.2 billion, up 13.4 percent from the previous year while total refunds amounted to Rs. 48.7 billion, up 3 percent with the number refunds declining by 3.9 percent to 115,654.

The interest rate paid on member balances stayed unchanged from the previous year at 11.5 percent in 2012.

The investment portfolio of the fund grew by 12.2 percent to Rs. 1.1 trillion in 2012 from Rs. 985.6 billion in 2011.

Rs. 1.01 trillion, or 91.5 percent of the total portfolio, was invested in government securities, Rs. 23.1 billion, or 2.1 percent, in rupee loans to the government, Rs. 8 billion, or 0.7 percent in corporate debentures and Rs. 59.2 billion, or 5.4 percent of the total portfolio, in equities listed on the Colombo Stock Exchange which has attracted much criticism from government and opposition MPs alike.

The EPF earned an income of Rs. 121.4 billion in 2012, up 4.6 percent from a year earlier.

"Interest income was the major source of income (74.9 per cent of the income) to the Fund. Interest income grew by 7.4 per cent from Rs. 84.7 billion in 2011 to Rs. 90.9 billion in 2012. Government securities held by the fund generated a weighted average rate of return of 11.1 per cent and the yields of those securities varied between 9.8 per cent and 12.7 per cent. The equity portfolio generated an income of Rs. 3,016 million in 2012, compared Rs. 2,678 million earned in 2011 indicating an increase of 12.6 per cent. These gains include capital gains and dividends realized during the year," the Central Bank said.

"Total operational expenditure of the Fund amounted to Rs. 948 million in 2012 compared to Rs. 786 million in 2011, which was an increase of 20.6 per cent. Total operational expenditure was maintained at 0.78 per cent of its total gross income in 2012, compared to 0.68 per cent in 2011. Over the years, the Fund has maintained its operational expenditure below 1 per cent of the total gross income," the bank.

According to the Central Bank, the EPF and National Savings Bank and other state banks continue to be captive sources of cheap funds for the government.

Earlier this year, the EPF was summoned before the parliamentary Committee on Public Accounts (COPA) for the first time in six years, and the Attorney General’s Department was asked to provide details of all EPF transactions after the fund was used to invest in loss making state-owned enterprises and loss making companies listed on the Colombo Stock Exchange, such as The Finance Company PLC.

A special report submitted to COPA by the AG Department said that as of January 15, 2013, Rs. 54 billion worth of EPF investments in relation to 57 listed companies had lost Rs. 11.7 billion of their value.

The EPF had invested in 76 listed companies at a total value of Rs. 63.16 billion as at 15 January 2013, the report said.

Analysts have also pointed out to the apparent conflict of interest when the Central Bank, as regulator of bank and non-bank financial institutions, invested EPF funds in these entities.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=77401