Proposed reforms aim to improve service quality, reduce member difficulties and bring the country’s largest retirement fund in line with modern economic and technological needs
Sri Lanka has begun another important step towards modernising the Employees’ Provident Fund system. This article explains what Cabinet has approved, why the 1958 law is being reviewed, the scale of the EPF, and what private-sector employees and employers should watch as the proposed amendment progresses.
Sri Lanka’s Cabinet of Ministers has approved a proposal directing the Legal Draftsman to prepare a bill to amend the Employees’ Provident Fund Act No. 15 of 1958, marking a significant new stage in the planned modernisation of the country’s private-sector retirement savings system.
The decision was taken at the Cabinet meeting held on 3 August 2026. According to the official Cabinet paper, the Department of Labour has already prepared an initial draft after considering proposals submitted by the Central Bank of Sri Lanka. The government says further amendments are required to provide a more efficient and higher-quality service while reducing the difficulties experienced by EPF members amid changing social, economic and technological conditions.
Importantly, Cabinet has approved the drafting of a bill. This does not mean that a new EPF law has already taken effect. The specific clauses, operational changes and implementation dates will become clearer only after the draft legislation is completed and progresses through the required legislative process.
Why the EPF matters to millions of Sri Lankan workers
The Employees’ Provident Fund was established in 1958 as a mandatory retirement savings scheme for employees in the private and semi-government sectors who are not entitled to a government pension.
Under the present system, employees contribute a minimum of 8% of their monthly earnings, while employers contribute at least 12%, creating a combined statutory contribution of 20%. The Commissioner of Labour oversees the Fund’s administrative functions, while the Central Bank of Sri Lanka is responsible for managing its assets and performing several financial and custodial responsibilities under the Act.
The Fund Behind Millions of Retirement Accounts
Source: Employees’ Provident Fund, Central Bank of Sri Lanka
A fund worth nearly Rs. 5 trillion
The scale of the EPF makes any legislative reform nationally important. Official figures show that the Fund’s net worth reached Rs. 4,942.9 billion at the end of 2025, representing a year-on-year increase of 13%.
The EPF recorded approximately 22.9 million member accounts, including inactive and multiple accounts accumulated when workers changed employment, while 3,139,880 contributing accounts were recorded during 2025. Contributions received during the year totalled Rs. 270.8 billion.
The Fund also provides certain pre-retirement facilities. These include housing-loan-related support and partial withdrawals of up to 30% of an eligible member’s balance for approved housing and medical purposes.
What Cabinet has—and has not—approved
The official Cabinet announcement does not reveal a clause-by-clause list of proposed amendments. It identifies the broader objectives of improving efficiency, addressing member difficulties and adapting the law to present-day conditions.
Therefore, claims that contribution percentages, withdrawal entitlements, retirement ages or interest calculations have already been changed would be premature. These details must be assessed when the actual bill or an official explanatory document is released.
Understanding the Current Stage
Cabinet approval begins the legislative drafting process. It does not immediately replace the existing EPF rules.
Cabinet Approved
- Preparation of a new amendment bill
- Use of the Department of Labour’s initial draft
- Consideration of proposals submitted by the Central Bank
- A focus on service quality and efficiency
Details Still Awaited
- The complete wording of the proposed amendments
- Any new procedures for members or employers
- Implementation dates and transitional arrangements
- The final legislation approved by Parliament
Existing statutory obligations remain relevant unless and until duly enacted legislation or official regulations provide otherwise.
Modernisation could address longstanding service challenges
The EPF system involves registrations, contribution records, employer compliance, recovery of arrears, member information amendments, benefit applications, death claims and pre-retirement withdrawals.
Many of these processes require coordination between the Department of Labour, the Central Bank, employers and employees. The Department of Labour currently operates separate branches for administration, claims, recoveries, employer registration, approved provident funds, death claims and member-information records.
Although the final reform proposals remain unpublished, the bill will be closely examined for improvements involving digital access, processing times, record accuracy, account consolidation, employer compliance, data protection, grievance handling and communication with members. These are areas to watch rather than confirmed provisions of the forthcoming bill.
The reform direction is not entirely new. In July 2024, Cabinet also identified the need to expand coverage and provide a more efficient service under a modernised EPF Act.
Wider discussions about EPF and ETF governance
The amendment process is taking place alongside a broader review of Sri Lanka’s retirement-fund governance.
In June 2026, Cabinet approved the appointment of a senior officials’ committee to examine whether EPF and Employees’ Trust Fund functions could operate within a unified governance framework under a tripartite board representing the government, employers and employees.
The Cabinet Office stated that any proposed framework should protect members’ assets legally and financially. However, the August EPF amendment announcement does not confirm that this governance proposal will automatically form part of the new bill.
What employees and employers should do now
Private-sector employees should continue checking their contribution records and keeping employment documents, salary records, membership details and identification information accurate.
Employers should continue meeting existing registration, reporting and payment obligations. Cabinet’s decision to begin drafting an amendment does not remove current responsibilities under the EPF Act.
Prepare Now—Without Panicking
No immediate action is required solely because Cabinet has authorised a draft bill, but accurate records remain essential.
For Employees
- Check that EPF contributions appear correctly
- Keep salary slips and employment records
- Update identification and contact details
- Resolve duplicate membership accounts where applicable
- Rely on official announcements rather than rumours
For Employers
- Maintain accurate employee registrations
- Remit contributions within required periods
- Keep payroll and contribution documentation
- Correct employee-data discrepancies promptly
- Review the bill when officially published
SLD’s final perspective
Modernising a law introduced nearly seven decades ago could significantly improve how millions of Sri Lankans interact with their retirement savings.
However, the success of the reform will depend on more than technology. Members will expect transparent consultation, strong protection of their savings, accurate records, accountable fund management, accessible multilingual services and a clear process for resolving complaints and contribution discrepancies.
The next important development will be the publication of the actual bill. Until then, employees and employers should continue following the existing EPF requirements and depend on announcements from the Department of Labour, the Central Bank, the Cabinet Office and Parliament.
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