The Employees' Trust Fund (ETF) in Sri Lanka: Building a Safety Net

The Employees' Trust Fund (ETF) is another crucial component of Sri Lanka's social security system, established under the Employees' Trust Fund Act No. 46 of 1980. It functions as a mandatory defined contribution scheme that complements the Employees' Provident Fund (EPF). Let's delve deeper into the ETF with some key details and numbers:

Membership and Coverage

  • Mandatory for Most Private and Semi-Government Employees: Similar to the EPF, the ETF scheme is mandatory for most employees in the private and semi-government sectors who are not covered by other pension schemes.
  • Exemptions: Certain categories like daily wage earners might be exempt.

Contribution Rates

  • Lower Contribution Compared to EPF: The ETF contribution rate is generally lower than the EPF. As of 2024, the minimum mandatory contribution rate for both employers and employees is 3% of the employee's gross monthly earnings. This translates to:
    • Employers contribute a minimum of 3% of the employee's gross monthly earnings to the ETF.
    • Employees contribute a minimum of 3% of their gross monthly earnings to the ETF.

Benefits

  • Retirement Benefit: Upon reaching retirement age (currently 60 years old), members can withdraw their total ETF savings along with accumulated interest.
  • Death Benefit: In case of a member's death, a lump sum benefit is paid to the nominated beneficiary. The exact amount depends on the member's total contributions and accrued interest.
  • Disability Benefit: In the event of permanent disability, members can access a portion of their ETF savings.

Investment Strategy

Diversified Portfolio: The ETF invests contributions in a diversified portfolio of assets like government securities, corporate debentures, and stocks. This aims to generate long-term returns for members.

Administration

  • Employees' Trust Fund Board: A separate board, the Employees' Trust Fund Board (ETFB), oversees the management and administration of the ETF.
  • Department of Labour: The Department of Labour assists with member registration and employer registration.