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To Keep EPFO ​​Viable, Officials Give House Panel Radical Idea | India News

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NEW DELHI: Senior Labor Ministry officials told a parliamentary labor panel on Thursday that for a pension fund like EPFO ​​to remain viable, it must move from the prevailing system of “defined benefits” to a system of “contributions defined “, where the members extract Benefits according to their contributions.
Sources said officials told the panel that EPFO ​​had more than 23 lakhs of retirees receiving Rs 1,000 per month, even though their contributions to the fund’s corpus had been less than a quarter of the benefits they received. They also said that it would be unfeasible for the government to support it in the long term, unless a “defined contribution” system was established.
Last year, the committee had questioned the Ministry of Labor for failing to implement an August 2019 recommendation from EPFO’s central board of trustees to increase the minimum monthly pension under the EPF Pension Plan to Rs 2,000 or Rs 3,000. . Sources told TOI that the ministry had said that increasing the monthly minimum pension to Rs 2,000 per subscriber would imply an additional financial burden of almost Rs 4,500 crore and Rs 14,595 crore, if raised to Rs 3,000 per month.
At Thursday’s meeting, officials also admitted to the panel that a portion of EPFO ​​funds invested in equity markets had turned into bad investments and returned negative results after the coronavirus-induced turmoil.
Asked about the “very obvious” negative returns the fund’s investments had made in March last year, the House panel asked EPFO ​​Central Commissioner Sunil Barthwal and Labor Secretary Apurva Chandra last October. explaining why EPFO ​​funds were invested in the stock market in March 2020, when volatility induced by the coronavirus had disrupted the markets and investments could have been avoided. The panel had noted, in particular, the exposure of EPFO ​​funds to IL&FS and other debt-laden housing funds.
Sources said officials informed the committee that only Rs 4,600 crore out of the total 13.7 lakh crore of EPFO’s corpus of funds, totaling 5% of the corpus, is invested in the markets. Chandra and Barthwal also told the panel that the government is deliberating on ways to ensure that EPFO ​​funds are invested in products and schemes that are “not burdened with risk.”

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