EPFO: No tweak to investment, life certificate process eased

Labour and Employment Minister Bhupender Yadav — who chairs EPFO’s CBT — launched the face authentication technology for pensioners, which will allow aged pensioners who face difficulties in getting their biometrics (fingerprint and iris) captured due to old age, to opt for face authentication while filing the life certificate.

The agenda for the CBT meeting had listed the proposal to hike the investment limit for equity but it was then withdrawn, an employees’ representative said. “The proposal was listed in the agenda but was withdrawn later. Employees’ representatives had raised concerns over it in an earlier meeting as raising the investment cap in equity could be risky,” the Board member said.

Labour Ministry officials said more informed discussions need to happen before taking a call on the decision and therefore, it will be taken up for discussion at the upcoming meetings of the Finance Investment and Audit Committee (FIAC) and then at the meetings of the CBT.

“This is true that we want returns (on investment) because we want that interest rate should not fall further. Beyond that, there should be good returns. So we are looking at various strategies, how we can earn that return on investment. It was not discussed in the CBT meeting. Some deliberations took place in FIAC but we want more informed discussions to happen. So based on that we will take a call. These are sensitive matters because you have to protect the interest of subscribers and at the same time we also have to see that it is not a risky investment. A balancing act has to be done and it has to be within the pattern of investment,” a senior Labour Ministry official said.

The EPFO is also looking at investment patterns in other pension funds such as Pension Fund Regulatory and Development Authority (PFRDA). “We are also looking at how PFRDA is doing. We are going through that literature also about what kind of steps PFRDA has taken. But then PFRDA is a contributory fund where the investor knows the risk because the document is there but an EPFO subscriber does not have a (legal) document about the risk involved. So a call has to be taken on that,” the official further said.

The EPFO can invest up to 15 per cent of its funds in equity, as per the pattern of investment notified by the Centre and internal guidelines. It invests only in exchange-traded funds (ETFs) and not individual shares.

The rate of return from investments of EPFO assumes significance as the retirement fund body opted to lower its interest rate for 2021-22 to 8.1 per cent, 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 questioned the 2019-20 rate and the 2018-19 rate of 8.65 per cent as well, besides the EPFO’s exposure to IL&FS and similar risky entities.

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Among other decisions taken by the EPFO, the CBT gave in-principle approval for centralised disbursal of pension for further improving the EPFO services for pensioners, a Labour Ministry statement said.

Yadav also launched a pension and employees deposit linked insurance scheme calculator, providing an online facility to pensioners and subscribers to calculate the benefits of Pension and Death Linked Insurance Benefit for which they are eligible. He also released the training policy of EPFO and a legal framework document.

The fund body also approved appointment of Citibank as custodian of securities for three years along with a proposal to extend the tenure of the present custodian Standard Chartered Bank till the new custodian takes over, in addition to ratification of the tenure of SBI MF and UTI MF as the ETF managers.