April 21, Colombo (LNW): At the close of 2024, Sri Lanka’s Employees’ Trust Fund (ETF) saw a notable rise in its financial standing, despite a strikingly low rate of active participation amongst its members.
Data released by the Central Bank of Sri Lanka (CBSL) reveal that of the 16.3 million member accounts registered under the ETF, only 2.3 million—just 14.11 per cent—were actively maintained during the year.
This low engagement rate did little to stifle the fund’s overall performance, which saw strong year-on-year expansion across several key indicators.
The ETF’s total asset base grew by 12.7 per cent, ending the year with a value of Rs. 591.3 billion.
The increase in contributions and returns suggests that whilst few members are actively engaging with their accounts, the fund’s long-term investments continue to yield considerable returns.
One of the most prominent signs of this upward trajectory was the increase in employer participation. The number of contributing employers rose from 74,927 in 2023 to 80,008 by the end of 2024, indicating a steady, if moderate, formalisation of employment and adherence to mandatory contributions.
Total member balances also expanded in step, growing by 11.9 per cent year-on-year to reach Rs. 564.3 billion. Contributions for the year totalled Rs. 42.0 billion, marking a 12.9 per cent rise.
However, the total amount disbursed to members in the form of superannuation benefits fell by 12.7 per cent, with only Rs. 33.4 billion paid out—raising questions about accessibility, awareness, or procedural hurdles that may limit withdrawals.
From an investment perspective, the fund remained heavily reliant on government securities, which accounted for an overwhelming 94.7 per cent of the total investment portfolio.
By the end of 2024, investments in government instruments stood at Rs. 550.5 billion, having increased by 14.7 per cent over the year. Overall, ETF investments grew to Rs. 581.1 billion, up 12.8 per cent from the previous year.
Despite the structural issues suggested by the dormancy of most accounts, the fund posted an 11.9 per cent return on investment for its members in 2024—an encouraging figure for the long-term health of the trust and for the value it offers to contributors.
Nevertheless, concerns remain regarding the disconnect between account activity and fund performance. Analysts argue that the high volume of inactive accounts reflects deeper systemic issues, such as job instability, gaps in enforcement, or insufficient financial literacy amongst workers regarding their retirement savings.
With only a fraction of the fund’s members actively engaged, questions are being raised about whether the fund’s growth is truly reflective of wider social security inclusion or merely the result of a small segment of compliant employers and account holders.
