Employees' Provident Fund and Employees' Trust Fund
EPF is a retirement savings fund built from employer and employee contributions; ETF is a separate fund built from employer contributions only, with welfare benefits.
Employees' Provident Fund (EPF)
The Employees' Provident Fund Act of 1958 set up a compulsory retirement savings fund for employees in the private sector and in State corporations without a pension scheme. Each month the employer deducts the employee's contribution from his earnings, adds its own contribution, and remits both to the fund. Each member has an individual account that is credited with interest every year. The Commissioner General of Labour administers the Act (registration, collection and payment of benefits), and the Monetary Board of the Central Bank of Sri Lanka is the custodian that manages and invests the fund.
When EPF benefits are paid
- On reaching the retirement age set by the law, as a lump sum.
- On permanent incapacity for work.
- To a woman member who leaves employment on marriage.
- On leaving Sri Lanka permanently.
- On joining pensionable public service.
- On death, to the member's nominees or heirs.
- Part of the balance may be withdrawn earlier for housing or medical needs, subject to conditions; the balance can also secure a housing loan from an approved bank.
Employees' Trust Fund (ETF)
The Employees' Trust Fund Act of 1980 set up a separate fund to which only the employer contributes, a set percentage of each employee's earnings. Its purpose is to give employees a share in the wealth they help create and to provide welfare benefits. It is managed by the Employees' Trust Fund Board. A member receives the balance on events set by the Act, such as retirement, migration or death (paid to nominees or heirs), and may receive welfare benefits such as help for certain medical treatments, disability and death benefits, and scholarships for members' children.
EPF and ETF compared
| Point | EPF | ETF |
|---|---|---|
| Law | Employees' Provident Fund Act (1958) | Employees' Trust Fund Act (1980) |
| Who contributes | Employer and employee | Employer only |
| Managed by | Monetary Board of the CBSL as custodian; Department of Labour administers | Employees' Trust Fund Board |
| Main purpose | Retirement savings | Employee savings plus welfare benefits |
| Main benefit | Lump sum at retirement and in listed events | Balance on retirement and other set events, plus welfare schemes |
Employer's duties under both laws
- Register the business and each employee with the fund.
- Deduct the employee's EPF share correctly; never deduct the ETF contribution from the employee.
- Remit contributions on time each month with the required returns.
- Keep records of earnings and contributions.
- Late or missed payments bring surcharges and legal action for recovery.
Every month a garment factory in Biyagama must deduct each worker's EPF share, add its own EPF and ETF contributions, and remit them on time; late payment brings surcharges. A worker can later use the EPF balance as security for a housing loan, and ETF may help with a child's scholarship.
Short answer: “Who contributes to the Employees' Trust Fund?” Only the employer, as a percentage of each employee's earnings; nothing is deducted from the employee.
Structured question: “Distinguish between the EPF and the ETF.” Compare law and year, who contributes, who manages, main purpose and main benefits. A table is ideal.
Essay: “Explain the purpose and main features of the Employees' Provident Fund Act and the Employees' Trust Fund Act.” For each: purpose, coverage, contributions, management, benefits; employer's duties and penalties; compare in a table; close.
EPF = Employee + Employer, for retirement, kept by the Central Bank. ETF = Employer only, for welfare, run by the ETF Board.