EPFO to Adopt Separate Investment Benchmarks for Its Social Security Schemes

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.