Secret Confiscation

April 23, 2007 (LBO) – The losses caused to a pension fund of two million Sri Lankan workers by the authorities through the use of a barely understood monetary technique reached a peak in 2006, according to the latest official data. “You know richer people, who can get the help of good accountants, good advisors can normally avoid the biggest suffering even from inflation. But the poor man or poor woman with a little savings deposits, they are the persons who suffer from runaway inflation.”

Two million private sector workers found their future blighted as their main retirement protection, the Employees Provident Fund (EPF), suffered an unprecedented real loss last year when inflation rocketed and returns fell in the face of excessive money printing to bridge the budget deficit.

Billions Lost

Last year, the employee’s provident fund declared an effective return of 10.2 percent to members.

But inflation measured by the Colombo Consumer Price Index (which is used to index the wages of workers) rose 19.30 percent by December 2006 indicating that the fund suffered a negative real return of 9.10 percent.

Based on the beginning of the year fund balance of 405 billion, even ignoring that year’s net contributio