EPFO eyes new benchmarks

The Employees’ Provident Fund Organisation (EPFO), which manages the retirement savings of India’s formal workforce, is looking to adopt separate benchmarks for the yields on investments under the three social security schemes it operates — the employees’ provident fund (EPF), pension scheme (EPS) and a deposit-linked insurance cover (EDLI), the Business Standard has learnt.

- SHIVA RAJORA

The development comes in the wake of a Reserve Bank of India (RBI) suggestion to the Labour and Employment Ministry to review the EPFO’s present approach of investing all three schemes’ corpus as a common ₹25 trillion pool with the same investment pattern, even though their actuarially assessable liabilities differ.

The RBI has also mooted a redesign of the benchmarks used to measure investment performance for the schemes.

EPFO invests anywhere between 45-65 per cent of all its fresh accretions in government securities, followed by 20-45 per cent in debt instruments, 5-15 per cent in the equity markets through index funds, and zero to five per cent in short term debt instruments.

The EPFO presently assesses the performance of its multiple fund managers on the basis of an evaluation conducted by its consultant Crisil based on portfolio yields and asset quality.