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The Employees’ Provident Fund Organization (EPFO) is planning significant changes in the investment structure of its huge superannuation fund. According to the report, EPFO ​​is developing a new strategy under which investments will be divided into three different benchmark yields. One for EPF (Provident Fund), one for EPS (Pension Scheme) and one for EDLI (Life Insurance Scheme). This step is being taken following the recommendation of the Reserve Bank of India (RBI), which advised redesigning the existing investment approach.

Work on new benchmark scheme:

To implement this new strategy, EPFO ​​has asked its portfolio manager CRISIL to prepare draft proposals. Once the proposal is ready, it will be reviewed by an external committee of financial experts. After this, an internal investment committee will also examine the proposal. If approval is received at all stages, the final recommendation will be sent to the government for implementation.

At present, EPFO ​​invests around 45-65 per cent of the new funds in government securities, 0-45 per cent in debt instruments, 5-15 per cent in equity index funds and 0-5 per cent in short-term debt. EPFO manages a retirement fund of about Rs 25 lakh crore, covering the provident fund savings of about 30 crore employees of India.

fund distribution system

When an employee joins an organization in the formal sector, he automatically becomes a member of EPFO. The monthly contribution amount of both the employee and the employer is divided into three parts. EPF, EPS and EDLI scheme. Typically, about 8 percent of the employer’s share goes to EPS and 4 percent to EPF.

To improve retirement benefits, the Central Board of Trustees (CBT), the apex decision-making board of EPFO, is planning to launch a new initiative. Under this, India Post Payments Bank (IPPB) will deliver digital life certificates directly to the homes of about 80 lakh pensioners. This initiative will increase convenience for pensioners and reduce dependence on physical verification at banks or offices.

This step is being considered an important initiative towards the use of modern technology and increasing transparency in both the investment management and pension distribution areas of EPFO.

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