The Central Bank of Sri Lanka (CBSL) has requested banks and financial institutions in the island to introduce financial instruments for private sector employees to receive a higher rate of interest after they deposit their moneys obtained on retirement from the Employees’ Provident Fund (EPF) and the Employees’ Trust Fund (ETF), said CBSL Deputy Governor Nandalal Weerasinghe.

He told AdaderanaBiz that this request had been made to the banks and financial institutions in Sri Lanka since in a situation where interest rates are decreasing the monthly income derived by the private sector employees after having deposited their funds in fixed deposits has decreased as well.

This was Mr. Weerasinghe’s response when AdaderanaBiz inquired from him about a media report that the government is planning to transform the EPF and ETF into a pension scheme without paying the full amount of a retiring private sector employee but holding a part to provide a monthly dividend.

“There are no such attempts as far as the Central Bank is concerned. Even if there are such attempts it is the CBSL that should be first aware as the custodian of the EPF,” he added.

However, there were media reports that the Finance Ministry is preparing new legislation to prevent retiring private sector employees from withdrawing their entire funds but retain a part as a pension scheme.

The EPF recently stated that its profits recorded by the Fund had exceeded Rs. 558 billion from 2009 to 2013.

Similarly, the unrealized losses on the EPF’s unsold shares are reportedly Rs. 4.4 billion as at 21 April 2014.