Considering the concerns raised by the employees’ representatives and the need for further deliberations, the EPFO in its 231st meeting did not take up the proposal to increase the incremental inflow for equity linked investments from 15 per cent to 20 per cent. The Central Board of Trustees (CBT) was held Friday-Saturday.
In other decisions, the Employees’ Provident Fund Organization (EPFO) introduced a face authentication facility to allow its 72 lakh pensioners to submit digital life certificates from any location.
Labor and Employment Minister Bhupendra Yadav – who chairs the EPFO’s CBT – launched face authentication technology for pensioners, which will allow aged pensioners facing difficulties in obtaining their biometrics (fingerprint and iris), which That can opt for facial authentication while filing. Life Certificate.
An employee’s representative said a proposal to increase the investment limit for equities was listed on the agenda of the CBT meeting, but it was withdrawn. “The proposal was listed on the agenda but was later withdrawn. In an earlier meeting, employees’ representatives had raised concerns over this as raising the limit for investment in equities could be risky.
Labor ministry officials said a more informative discussion is needed before taking a call on the decision and hence, it will be taken up for discussion in the upcoming meetings of the Finance Investment and Audit Committee (FIAC) and then in the CBT meetings.
“It is true that we want return (on investment) because we do not want the interest rate to fall further. Apart from this, there should be good returns. So we are looking at different strategies to see how we can earn that return on investment. This was not discussed in the CBT meeting. There was some deliberation in the FIAC but we would like to have a more informative discussion. So based on that we will take a decision. These are sensitive matters as you have to protect the interest of the clients and at the same time we have to see that it is not a risky investment. A senior labor ministry official said, a balancing act has to be done and it should be within the pattern of investment.
The EPFO is also looking at investment patterns in other pension funds like the Pension Fund Regulatory and Development Authority (PFRDA). “We are also watching how the PFRDA is doing. We are also reading the literature about the steps taken by PFRDA. But then PFRDA is a contributory fund where the investor knows the risk as the document is there but an EPFO subscriber does not have a (legal) document about the risk involved. So a decision has to be taken on that,” the official further said.
The EPFO can invest up to 15 per cent of its corpus in equities as per the investment pattern and internal guidelines notified by the Centre. It only invests in Exchange Traded Funds (ETFs), not individual stocks.
The rate of return from EPFO investments assumes significance as the retirement fund body opted to reduce its interest rate to 8.1 per cent from 2021-22, a four-decade low.
The finance ministry, which ratifies the EPF interest rate recommended by the CBT, has over the years questioned the high interest rate offered by the EPFO. It had also questioned the rate of 2019-20 and 2018-19 rate of 8.65 per cent, apart from EPFO exposure for IL&FS and similar risk-averse entities.
News bulletin , Click to get the best interpreters of the day delivered to your inbox
A Labor Ministry statement said that among other decisions taken by the EPFO, the CBT gave in-principle approval for centralized distribution of pension to further improve EPFO services for pensioners.
Yadav also launched a Pension and Employee Deposit Link Insurance Scheme Calculator, which provides an online facility for pensioners and subscribers to calculate the benefits of pension and death linked insurance benefits for which they are eligible. He also released EPFO’s training policy and a legal framework document.
The fund body also approved the proposal to extend the tenure of the current custodian Standard Chartered Bank till a new custodian takes over, besides ratifying the tenure of SBI MF and UTI MF, as well as appointment of Citibank as custodian of securities for three years. also approved. As ETF managers.