EPFO plans to invest 5% of annual deposits on InvITs, alternative funds
The EPFO Central Board of Trustees also approved developing a centralised IT-enabled systems by C-DAC to move the field functionalities on a central database in a phased manner
PremiumEmployees' Provident Fund Organisation (EPFO), its the meeting of its Central Board of Trustees (CBT), has approved measures to invest up to 5 per cent of its annual deposits in infrastructure investment trusts (InvITs) and other alternative funds.
The CBT empowered Finance Investment and Audit Committee (FIAC) to decide upon the investment options, on case-to-case basis, for investment in asset classes included in the Pattern of Investment notified by the Centre. Investment in alternative investments, including trusted public InvITs, has a limit of 5 per cent of annual deposits.
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Under its current investment pattern, EPFO invests around 45-50 per cent of its incremental deposits in government securities, 35-45 per cent in debt instruments, around 5-15 per cent in equity market, up to 5 per cent in short-term debt instruments and another 5 per cent in short-term debt instruments.
As corpus with EPFO grows, the pension fund body is planning to diversify its investments. While investing in InvITs will offer long-term investment options and help EPFO diversify its investments, there remains a fair amount of risk too.
During its meeting, the EPFO Central Board of Trustees also approved developing a centralised IT-enabled systems by C-DAC to move the field functionalities on a central database in a phased manner. This will enable smoother operations and enhanced service delivery. The centralised system will facilitate de‐duplication and merger of all provident fund accounts of any member. This will remove the need to transfer accounts on changing jobs.
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The suggestion of the Chairman to constitute four sub-committees, comprising members of the Board from employees, employers’ side as well as from representatives of the Government side was welcomed and approved by the Board.
Two committees on establishment-related matters and futuristic implementation of Social Security Code will be headed by the Minister of State Labour and Employment. The remaining two committees on digital capacity building and pension-related issues will be headed by Union Labour and Employment Secretary.
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The draft 68th annual report on the functioning of the EPFO for the year 2020-21 was approved, with the recommendation to place it before the Parliament, through Central Government.
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