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Tuesday, December 07, 2021

EPFO board meet: Investment in AIFs on case-to-case basis; centralised database

The decision was taken at the 229th meeting of the Employees' Provident Fund Organisation's apex decision-making body -- Central Board of Trustees (CBT), headed by Union Labour Minister Bhupender Yadav.

By: ENS Economic Bureau | New Delhi |
Updated: November 21, 2021 1:17:38 am
EPFOThe government recently added new instruments like InvITs in the Pattern of Investment for pension funds. (File photo)

The Central Board of Trustees (CBT) of retirement fund body EPFO on Saturday approved investment of up to 5 per cent of its annual deposits in new asset classes of alternative investment funds (AIFs), including infrastructure investment trusts (InvITs).

The Board has empowered the Finance Investment & Audit Committee (FIAC) to decide upon the investment options, on a case-to-case basis, for investment in all such asset classes. The Employees’ Provident Fund Organisation (EPFO) would go for investments in public sector bonds. At present, the National Highways Authority of India (NHAI) and Power Grid Corporation (PGCIL) have launched public sector InvITs.

The decision was taken at the 229th meeting of the EPFO’s CBT, chaired by Union Labour Minister Bhupender Yadav.

In April, the Labour Ministry notified changes in investment options to include units issued by Category I and Category II AIFs regulated by the Securities and Exchange Board of India (Sebi).

The EPFO can invest up to 15 per cent of investment in equity, as per the pattern of investment notified by the central government and the internal guidelines of the EPFO approved by the CBT. It had invested Rs 7,715 crore in equity till June 30 this year.

Asked whether the EPFO will invest in private sector InvITs, Yadav told reporters, “At present we have decided to invest in only newly added government instruments (bonds and InvITs). There is no percentage for that. It will be decided on case to case basis by the FIAC.”

Labour Secretary Sunil Barthwal told reporters, “There are certain instruments (prescribed in norms) where we were not able to invest due to various reasons. Now, we would be in a position to invest in those instruments.”

“In a significant decision that will yield a higher rate of return, the earlier ban on investment pattern by CBT was lifted and FIAC has been empowered to approve on a case to case basis,” said CBT member and employers’ representative KE Raghunathan.

The Board also approved development of centralised IT-enabled systems by C-DAC. Following this, the field functionalities will move on a central database in a phased manner which will facilitate de-duplication and merger of all provident fund (PF) accounts of any member. It will also remove the requirement of transfer of account on change of job.

The CBT meeting saw a low participation rate from the states, a point which is learnt to have been raised as a concern by the Labour Minister. CBT members also discussed the risky investments in DHFL, YES Bank, Indiabulls, with some members advising for a careful encashment of those investments.

The draft 68th annual report on the functioning of the EPFO for the year 2020-21 was also approved in the meeting, with the recommendation to place it before Parliament.

The Board also decided to constitute four sub-committees, comprising members of the board from employees’ and employers’ side as well as representatives of the government. Two committees on establishment-related matters and futuristic implementation of Social Security Code will be headed by the Minister of State for Labour and Employment.

The remaining two committees on digital capacity building and pension related issues will be headed by the Union Labour and Employment Secretary, an official statement said.

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