personal finance

EPFO approves public sector InvITs, bonds as investment options

The central board of trustees of the Employees’ Provident Fund Organisation (EPFO) has approved the government’s proposal to allow the retirement fund body to invest up to 5% of its annual deposits in alternative investments funds including the infrastructure investment trusts (InvITs).

However, this will be on a case to case basis and on approval from the Finance Investment and Audit Committee and the investments will initially be restricted to public sector funds only.

The government is of the opinion that if EPFO wants to give a high rate of returns to its subscribers year-after-year, it will have to follow the investment pattern notified by the finance ministry.

“The board has approved investments in AIFs. However, it will be on a case to case basis and we shall only focus on government-backed alternatives which are category one funds like public sector InvITs,” labour and employment secretary Sunil Barthwal said after the 229th CBT meeting on Saturday.

Under the existing notified investment pattern, the EPFO invests between 45-50% of its incremental deposits in government securities, 35-45% in debt instruments, between 5-15% in equities and up to 5% in short-term debt instruments.

Recently, the government allowed up to 5% investment in asset-backed, trust-structured and miscellaneous investments including the alternate investment funds (AIFs), real estate investment trusts (REITs) and units of infrastructure investment trusts (InvIT), paving way for EPFO to expand its investment basket to maximise returns.

The central board of trustees of EPFO or CBT is a tripartite body involving government, workers and employers’ representatives and the decision of CBT is binding on EPFO. It is headed by the labour minister.

EPFO’s monthly deposits range between Rs 15,000 crore and Rs 16,000 crore or Rs 1.8 lakh crore to Rs 1.9 lakh crore annual deposits.

Besides, the CBT has also approved setting up of four sub-committees, one each on establishment related matters, the futuristic implementation of the Social Security Code, building up of digital capacities and pension related issues.

While the first two committees will be headed by minister of state for labour Rameswar Teli, the other two will be headed by the labour secretary.

“Further, the CBT has approved development of centralized IT-enabled systems by C-DAC which will enable EPFO to move on a central database in a phased manner enabling smoother operations and enhanced service delivery,” the labour ministry said.

“The centralized system will facilitate de-duplication & merger of all PF accounts of any member. It will remove the requirement of transfer of account on change of job,” it added.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.