EPFO empowers advisory body FIAC to take call on investment in new instruments like InvITs

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Retirement fund manager EPFO on Saturday decided to empower its advisory body Finance Investment and Audit Committee (FIAC) to take a call on investing in new asset classes like InvITs.

At present, the National Highways Authority of India (NHAI) and Power Grid Corporation (PGCIL) have launched public sector infrastructure investment trusts (InvITs). The EPFO would also go for public sector bonds.

The decision was taken at the 229th meeting of the Employees’ Provident Fund Organisation’s apex decision-making body — Central Board of Trustees (CBT), headed by Union Labour Minister Bhupender Yadav.

Asked whether the EPFO will invest in private sector InvITs, Yadav told reporters after the meeting here, “At present we have decided to invest in only newly added government instruments (bonds and InvITs). There is no percentage for that. It will be decided on case to case basis by FIAC.”

The board decided to empower FIAC to decide upon the investment options, on a case-to-case basis, for investment in all such asset classes which are included in the Pattern of Investment as notified by the Ministry of Finance for provident and pension funds in India, an official statement said.

Explaining the rationale behind the decision, Labour Secretary Sunil Barthwal told reporters,”If we want to provide high rate of interest then we have to follow guidelines of finance ministry. There are certain instruments (prescribed in norms) where we were not able to invest due to various reasons. Now we would be in a position to investment in those instruments.”

The government recently added new instruments like InvITs in the Pattern of Investment for pension funds.

“It has been decided in principal that on case-to-case basis, the FIAC will take a decision in this regard. The CBT has authorised the FIAC to do so. FIAC will take a decision like in case of NHAI and Power Grid (InvITs),” he said.

However, he added that at present only public sector bonds and InvITs will be considered.

“We will invest in those InvITs or bonds where we would get security of funds as we are trustees of the employees’ provident fund. We will focus on return maximisation but also keep in mind the security of funds,” he noted.

During the meeting, it was also decided to constitute four sub-committees, comprising members of the board from employees’ and employers’ side as well as representatives of the government.

Two committees on establishment related matters and futuristic implementation of Social Security Code will be headed by the Minister of State Labour and Employment.

The remaining two committees on digital capacity building and pension related issues will be headed by the Union Labour and Employment Secretary.

The draft 68th annual report on the functioning of the EPFO for the year 2020-21 was also approved in the meeting, with the recommendation to place it before Parliament.

Approval was accorded for development of centralised IT-enabled systems by C-DAC. Post this, the field functionalities will move on a central database in a phased manner enabling smoother operations and enhanced service delivery, the statement said.

The centralised system will facilitate de-duplication and merger of all PF accounts of any member. It will also remove the requirement of transfer of account on change of job.

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