The government is of the opinion that if EPFO wants to give its subscribers high rates of returns, it will have to follow an investment pattern notified by Finance Ministry.
The Central Board of Trustees (CBT) has approved a proposal from the government to allow EPFO to invest up to $5 million in alternative investment funds, including InvITs. CBT members recommended that an additional 2% be invested yearly for five years after approval and if successful this would represent one-fifth total deposit under the INVEST-PREPARE initiative!
The Finance Ministry has notified a new investment pattern for EPFO. The returns of public funds are expected to be higher, but only on an approval basis from the Investment Committee and Restrictions will initially include just government-owned assets
The Indian government is considering implementing high rates of return in order to attract more subscribers year after year; however, they need financial institutions that have been approved by both FIAC as well as INFAM Advocates Advisory Services – one body responsible for regulating these firms under SEBI guidelines.”
After a long and complicated meeting, minister Sunil Barthwal announced that the government has approved investments in AIFs for category one funds like public sector InvITs. The labor secretary also said they will be case-by-case only focusing on cases where there is an opportunity of high returns with low-risk factors involved
One would assume this statement was very exciting but it turns out he isn’t too thrilled about all these changes happening around him at work – mainly because now even his coffee tastes better than usual!
The EPFO invests between 45-50% of its incremental deposits in government securities, 35-45% as debt instruments, and up to 15 percent with equity.
The government has allowed up to 5% investment in asset-backed, trust structured, and miscellaneous investments including alternate funds (AIFs), real estate trusts (REIT), or units of infrastructure investment trusts. This will allow EPFO to increase its portfolio for maximized returns!
The Central Board of Trustees (CBT) is a tripartite body that involves the government, workers, and employers’ representatives. The decision CBT makes are binding on EPFO – it can’t be ignored! It’s headed by India’s Labour Minister in charge of labor matters so he has all responsibility for this awesome position to get things done right away when needed
EPFO’s monthly deposits range between 1.8 lakh crore and 16 thousand crores, annualizing to 21 billion dollars! The CBT has also approved setting up of four sub-committees: one each on establishment related matters; futuristic implementation of the Social Security Code; building digital capacities for financial inclusion into today’s Banking universe (the PMGC) as well as pension issues that arise out of social security codes such like Senior Citizens’ pensions etc., which needs updating with newer legislations
The labor ministry has notified the Central Board of Trade about its plans to create a central database for EPF. This will enable smoother operations and enhanced service delivery, according to an update from their website published today (August 25).