Nearly 2.1 million EPF members are to benefit from Amendments to the EPF Act No. 15 of 1958, which will be presented in Parliament next month, Presidential Secretariat sources said yesterday.
Among the benefits are the release of 30 per cent or up to as much as a year’s contribution of the member’s deposits for major surgery, and accidents, and the release of 30 percent of the deposit as a pre-retirement benefit for housing purposes.
EPF Superintendent L. Y. Dharmasena told The Island yesterday that Minister of Labour and Manpower Athauda Seneviratna had, on the instructions of President Mahinda Rajapaksa to provide increased benefits for the welfare of the working class, decided to bring the proposed Amendments before the 50th Anniversary of the Employees Provident Fund in July.
He said a meeting in this connection was convened by the Minister with the participation of the Secretary to the Ministry of Labour and Manpower Mahinda Madihewa and the Commissioner of Labour (EPF) Upali Wijeweera at the Ministry yesterday.
It was proposed that the present system of providing Housing loans through the Banks should be done away with as the benefit was not achieved when the interest rates charged by banks was a considerable portion of repayment of the loans. The new amendments intended to target the provision of loans at a low interest.
At present, the EPF division at the Ministry of Labour provides a certificate to the Banks guaranteeing payment of Housing loans up to 75 per cent of the deposits held by the individual member in case of default. But most Banks are in the habit of not taking follow up action to ensure that borrower pays up the instalments regularly in time.
For instance when the member obtains a loan at 20 per cent interest the Banks add a surcharge of 4 per cent for delays and the interest goes up to 24 per cent, whereas the depositors were paid only 10.2 per cent as interest on their EPF deposits in 2006 and 11.2 per cent in 2007.
The members received only 11.2 percent interest while paying 24 percent interest on bank loans and the balance in payments is added on to their original loan without their knowledge whereby their deposits decrease gradually when they continue to default paying their instalments, leaving them without any funds when they retire.
Therefore, it was proposed to do away with the old scheme and introduce the new system where 30 per cent of the deposit would be granted for housing purposes as a pre-retirement benefit.
Similarly, members face financial difficulties when they have to undergo major surgery such as a Bypass operation or Kidney transplant and it was proposed that 30 percent of the deposits would be granted to members in such cases.