By Kartik Goyal/ Bloomberg
The Employees’ Provident Fund Organization, India’s biggest pension fund, posted a 7% increase in assets in the nine months ended 31 December, 2006, Labour Minister Oscar Fernandes said.
Assets managed by the pension fund rose to Rs967.7 billion from Rs904.38 billion as of 31 March, 2006, Fernandes said in a written reply to a question in parliament in New Delhi on 30 April.
The fund is a savings plan for members and provides them with retirement benefits or social security if they leave a job.
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 fiscal year that ended 31 March.
The fund invested 54% of assets in the special deposit scheme, 18.06% in bonds of state-run companies, 15.27% in federal government bonds and 11.11% in bonds of state governments, the government said.
The central board of trustees, a labor 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 fiscal year ended 31 March, 2007, and the current year, Fernandes said last week.
The government in January last year reduced the rate to 8.5% for the year ended 31 March, 2006, 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.