EPF and ETF – What you need to know

The Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) are mandatory social security programs in Sri Lanka that play a critical role in securing employees’ financial well-being after retirement. This comprehensive guide provides a clear overview of both programs, including contribution rates, eligibility requirements, and recordkeeping obligations for employers and employees. Updated – January 2024

Understanding EPF and ETF

• EPF: Building a Secure Retirement (Established in 1958)

  • Applies to most private and some government sector employees.
  • Eligibility: Mandatory for most private and some government sector employees.
  • Contribution Rates:
    
    • Employee contribution: 8% of monthly salary.
    • Employer contribution: 12% of monthly salary.
    • Total contribution: 20% (employer + employee).
  • Management: The Central Bank of Sri Lanka manages EPF funds.
    
    

• ETF: A Safety Net for Private Sector Employees (Introduced in 2006)

  • Caters specifically to private sector employees not covered by EPF.
  • Eligibility: Mandatory for private sector employees not covered by EPF.
  • Contribution Rates:
    • Employer contribution: 3% of monthly salary.
  • Management: The ETF Department, under the Ministry of Finance and Economic Affairs, manages ETF funds.

Employee Awareness and Recordkeeping

• Employee Responsibilities:

  • Employees are required to contribute designated percentages of their monthly salary to both EPF and ETF (refer to contribution rates above). These contributions are automatically deducted by employers.
  • Regularly review EPF and ETF contribution statements provided by the employer to ensure accuracy and timely deposits.
  • Understand their eligibility status (EPF or ETF) based on employment sector and type.
  • Be aware of the benefits offered by EPF and ETF upon retirement or other qualifying situations (refer to EPF and ETF department websites for details).

• Employee Recordkeeping (Optional): While employers maintain detailed records, employees can keep copies of the following documents for their reference: * Payslips reflecting EPF and ETF deductions. * Annual statements received from the EPF or ETF department (if provided by the employer). * Any communication regarding EPF or ETF contributions from the employer or department.

Important Considerations

• Contribution rates are subject to change by the Sri Lankan government. Stay informed through official channels like the EPF or ETF Department websites.
• There may be variations in contribution rates for specific employee categories. Employers should consult with relevant authorities for clarification.

Employer Registration and Payment Procedures

• Obtain a Labour Identification Number (LIN) by registering with the Department of Labour (online registration available).
• Subsequently, register for EPF/ETF by submitting the designated registration form to the respective department (online or in-person).
• Upon registration, employers receive a unique employer code for identification during contribution payments.
• Calculate monthly contributions based on employee salaries and the fixed contribution rates (refer to EPF and ETF sections above).
• Contribution methods include online banking, designated banks, or the respective department’s office. Employer code and employee EPF/ETF numbers are required for payments.
• File monthly EPF/ETF returns, detailing employee-wise contributions, through the department’s online portal or in-person.

Employer Recordkeeping Requirements

Employers are obligated to maintain comprehensive records related to EPF and ETF contributions for auditing and compliance purposes. These records include:

• Employee Information: Name, address, date of birth, National Identity Card (NIC) number, etc., for each employee.
• Contribution Records: Detailed records of EPF/ETF contributions made for each employee, including amount and date of each contribution.
• Payroll Records: Monthly salary details, deductions, and benefits for each employee.
• Returns and Statements: Copies of all filed EPF/ETF returns and statements.
• Bank Statements: Documentation reflecting EPF/ETF contributions made and any accrued interest.
• Annual Accounts: Records reflecting employer and employee contributions, along with any earned interest, for annual accounts.

Conclusion

EPF and ETF are essential pillars of Sri Lanka’s social security system, guaranteeing financial security for employees in their post-retirement years. By understanding these programs, employers and employees can effectively navigate their roles and responsibilities, ensuring a secure and prosperous retirement future.

Additional Resources

• Employees’ Provident Fund Department: www.epf.lk
• Employees’ Trust Fund Department: www.etfb.lk