However, this will be on a case-by-case basis and on approval from Finance Investment and Audit Committee And the investment will initially be limited to public sector funds only.
The government is of the view that if the EPFO wants to provide higher rate of return year-on-year to its subscribers, it will have to follow the investment pattern notified by the Finance Ministry.
“The board has approved investment in AIF. However, this will be on a case by case basis and we will focus only on government-backed options which are category one funds like public sector InvITs,” Labor and Employment Secretary Sunil Barthwal said after the 229th CBT meeting on Saturday.
Under the existing notified investment pattern, EPFO invests 45-50% of its incremental deposits in government securities, 35-45% in debt instruments, 5-15% in equities and up to 5% in short-term debt instruments.
Recently, the government has allowed investment of up to 5% in asset-backed, trust-structured and diversified investments, including alternative investment funds (AIFs), real estate investment trusts.REIT) and Infrastructure Investment Trusts (InvITs), paving the way for EPFO to expand its investment basket to maximize returns.
The Central Board of Trustees of EPFO or CBT is a tripartite body consisting of representatives of the government, employees and employers and the decision of the CBT is binding on the EPFO. It is headed by the Minister of Labor.
EPFO’s monthly deposits range between Rs 15,000 crore to Rs 16,000 crore or Rs 1.8 lakh crore to Rs 1.9 lakh crore annual deposits.
In addition, the CBT has also approved the formation of four sub-committees, each on establishment related matters, future implementation of the Social Security Code, building digital capabilities and pension related issues.
The first two committees will be headed by Minister of State for Labor Rameshwar Teli, while the other two will be headed by the Labor Secretary.
In addition, the CBT has approved the development of a centralized IT-enabled system by C-DAC, which will enable EPFO to move on to the central database in a phased manner and enable better service delivery, the Labor Ministry said. ”
“The centralized system will facilitate de-duplication and merger of all PF accounts of any member. This will remove the need for transfer of account on change of job,” it added.