Sri Lankan government is now planning to transfer various private provident funds and pension funds, registered with the Commissioner of Labour, to the Insurance Board of Sri Lanka (IBSL) for better supervision and management. The whole transfer process will be overlooked by the Central Bank.
A reliable source said, “Although these funds are regulated by the Labour Commissioner, the supervision does not include prudential rules and guidelines. The absence of a regulatory and supervisory system for private superannuation funds has been identified as one of the gaps in the regulation of the financial system,”
Currently, there are 170 private provident and pension funds with about 1,50,000 members and assets worth about Rs. 125 billion.
The Central Bank also proposed that all the funds except for the Employees’ Provident Fund be supervised by IBSL. The reason behind this exclusion is that the EPF funds are already managed by the Monetary Board, highest regulatory authority in the country.
The Central Bank of Sri Lanka proposed to set up a new regulatory authority to overlook all the fund because prior to the introduction of the Employees’ Provident Funds, many major institutions of the country including commercial banks, Unilevers, Sri Lanka Telecom and Mercantile Sector Provident Funds Society, and John Keells Holdings, set up their own superannuation funds.
A law, introduced in 1996, prohibits further creation of such funds. By creating a new regulatory authority to manage all the superannuation funds this law could be changed and the funds will be channeled to the country’s capital market.
According to the Central Bank, the Insurance Board of Sri Lanka (IBSL) is very well suited to manage these funds. The bank has already created necessary laws and corresponded with the IBSL and the Labour Commissioner.
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