EPFO trustees decides to set up panels on investment options

Retirement fund body EPFO’s trustees today decided to constitute a panel to look into various investment options…

A member of the EPFO’s Central Board of Trustees on Wednesday alluded to the government’s push towards annuity-based pension schemes being done to create a market for insurance companies.

Retirement fund body EPFO’s trustees today decided to constitute a panel to look into various investment options like increasing exposure to housing finance firms and private sector bonds.

The Central Board of Trustees’ (CBT) also took a slew of other decisions that will enable EPFO to park in fund as fixed deposits in 12 more banks, extend minimum monthly pension of Rs 1,000 beyond current fiscal, besides nominating SBI as its fund manager for three years.

The trustees also decided to set up a separate panel, comprising two representatives each of employers and employees, that will look into facilitating low-cost housing loans to subscribers.

The proposal to invest a part of EPFO funds in equities, however, did not come up for Central Board of Trustees’ (CBT) consideration in its meeting today.

Sources said the executive committee of the EPFO opposed investment in equities in its meeting held yesterday.

EPFO’s apex decision making body CBT is headed by Labour Minister Bandaru Dattatreya.

When asked about CBT decisions on relaxing investment norms to maximise returns on investments by the Employees’ Provident Fund Organisation’s (EPFO), the Minister told reporters: “An expert committee to look into this issue.”

The CBT decided to set up a panel after examining a proposal to relax norms for increasing exposure in housing finance firms and to increase limit for investment in private sector bonds from existing 10 per cent to 15 per cent of the corpus.

The trustees were were of the view that there is need for of an in-depth analysis of various investment options.

The PMO had earlier suggested that EPFO should deploy 15 per cent of funds as loan for low-cost housing as it would generate a credit flow of Rs 70,000 crore.

The initiative is expected to create 3.5 lakh additional low-cost houses.

The CBT also decided to change the norm for parking its funds as fixed deposits in banks. At present, EPFO invests in term deposit receipts of eight banks which meet the norm of having non-performing assets of 2 per cent. The board raised this NPA cap to 3 per cent.

The decision will enable EPFO to invest in 12 more banks– Dena Bank, IDBI Bank, Indian Bank, Oriental Bank of Commerce, Punjab National Bank, State Bank of India, UCO Bank, Corporation Bank and Union Bank of India.

The trustees also approved the proposal to reduce maximum time for settlement of various claims and payment to beneficiaries under EPF, Pension and Employees’ Deposit Linked Insurance scheme to 20 day from existing 30 days.

The board also cleared another proposal for implementation of minimum monthly pension of Rs 1,000 in perpetuity. As per the notification issued on September 1, the entitlement was available till March 31 and this move will enable beneficiaries of this scheme to get pension even after his fiscal.

It was also decided the EPFO will open accounts in more public sector banks. At present it maintains bank accounts in State Bank of India (SBI).

The CBT has also decided to nominate SBI as its fund manager for three years term beginning April 1, 2015. Thus SBI would not participate in the ongoing bidding process for appointment as fund managers from April 1. 2015.

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