By: Staff Writer
January 06, Colombo (LNW): The Employees’ Provident Fund is often described as the backbone of Sri Lanka’s retirement system, but for tens of thousands of workers, that backbone is quietly cracking under the weight of unpaid employer contributions. Despite holding assets worth around Rs. 4.4 trillion and maintaining more than 21.5 million member accounts, the EPF continues to be undermined by persistent non-compliance, raising concerns about the effectiveness of enforcement mechanisms.
The Ministry of Labour has responded by upgrading its online complaint management system, allowing workers to report EPF-related violations directly through the Labour Department’s website. Officials insist this digital shift marks a turning point. Ministry Secretary S.M. Piyatissa says complaints are now actively followed up, with employees being informed of enforcement actions taken against defaulting employers, provided they submit their contact details.
Yet the scale of the problem suggests systemic weaknesses rather than isolated lapses. Parliamentary disclosures by the Ministry of Finance indicate that 22,450 companies have defaulted on EPF contributions since 2015, accumulating arrears of nearly Rs. 35 billion. These are not minor bookkeeping errors but sustained failures that have deprived workers of legally mandated savings over many years.
The current enforcement process begins with formal notifications, followed by discussions with company representatives. Legal action is taken only when these steps fail, and while courts can impose fines alongside recovery of dues, the lengthy process often works against employees. For workers nearing retirement or facing emergencies, delayed contributions may never fully compensate for lost investment growth.
This situation is particularly troubling given the central role the EPF plays in the national economy. Governed by the EPF Act No. 15 of 1958, the fund compels workers to part with a portion of their wages in the expectation of security and dignity in retirement. Employers, meanwhile, are entrusted with an even larger contribution obligation. When that trust is broken, the social contract underpinning the EPF is weakened.
Beyond retirement payouts, the fund supports housing loan guarantees and limited withdrawals for medical and housing needs, benefits that become meaningless if contributions are not credited on time. Moreover, as one of the largest domestic investors, the EPF’s stability underpins government borrowing and financial market confidence. Persistent defaults therefore threaten more than individual balances; they undermine economic credibility.
While the Labour Department’s digital reforms are a step forward, critics argue that relying on worker complaints places an unfair burden on employees, many of whom fear retaliation or lack awareness of their rights. Without proactive audits, automatic detection systems and faster penalties, the EPF risks remaining a giant fund with fragile enforcement. Until compliance becomes the rule rather than the exception, workers will continue to pay the price for institutional inertia.
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