New Delhi: The Employees’ Provident Fund Organization (EPFO), India’s biggest pension fund, posted a 7% increase in assets in the nine months ended 31 December 2006, Union labour minister Oscar Fernandes said.
Assets managed by the pension fund rose to Rs96,770 crore from Rs90,438 crore as on 31 March 2006, Fernandes said in a written reply to a question in Parliament on Monday. The fund is a savings plan for members and provides them with retirement benefits or social security if they leave a job.
Piggy bank: The fund is a savings plan for members and provides them with retirement benefits or social security once they retire.
The pension fund is benefiting as companies such as Tata Steel Ltd and Maruti Udyog Ltd hire more workers to step up production to meet rising demand in the world’s second-fastest-growing major economy after China. India’s economic growth is estimated to have accelerated to 9.2% in the last fiscal.
The fund invested 54% of assets in the special deposit scheme, 18.06% in bonds of state-run companies, 15.27% in Central government bonds and 11.11% in bonds of state governments, the government said. The central board of trustees, a labour ministry panel that governs the pension fund, is likely to meet in the second week of May to decide the rate of return for the last fiscal, and the current year, Fernandes said last week.
The government, in January 2006, reduced the rate to 8.5% for FY06 from 9.5%.
The fund, which paid 9.5 % in the previous three years, had to cut the rate to prevent its reserves from being eroded as returns from its investments weren’t enough to maintain the payout.