Source: BS
Context:
The Employees’ Provident Fund Organisation (EPFO), which manages the retirement savings of India’s formal workforce, is considering separate benchmarks for its three social security schemes:
- Employees Provident Fund (EPF)
- Employees Pension Scheme (EPS)
- Employees Deposit-Linked Insurance (EDLI)
This comes after a Reserve Bank of India (RBI) suggestion to the Labour and Employment Ministry to review EPFO’s current approach of pooling all three schemes’ corpus (~₹25 trillion) with a common investment strategy, despite differing actuarial liabilities.
Current Investment Pattern:
- 45–65% in government securities
- 20–45% in debt instruments
- 5–15% in equity markets via index funds
- 0–5% in short-term debt instruments
Performance is currently assessed by Crisil, benchmarking debt portfolios to bond yields and equity portfolios to indices like BSE Sensex and Nifty 50.
Proposed Changes:
- Use separate benchmarks: one for EPF corpus, another for EPS and EDLI investments.
- Draft methodology prepared by Crisil; to be validated by external experts.
- Final proposal to go to EPFO Investment Committee and then recommended to the government.
Benefits:
- Better alignment of investment strategy with the actuarial liabilities of each scheme.
- Enhanced monitoring and performance evaluation of fund managers.
Additional Initiative – Doorstep Delivery of Digital Life Certificates (DLCs):
- Central Board of Trustees (CBT) to approve facility via India Post Payments Bank (IPPB) for ~8 million EPS pensioners.
- Enables pensioners to receive DLC at home or nearby post offices, addressing challenges of digital illiteracy and access.
- Charges reduced from ₹70 to ₹50, reimbursed by EPFO.
- Ensures timely pension payments and prevents overpayments.
