EPFO not to invest in equity

Ruling out any change in investment policies, the Employee Provident Fund Organisation (EPFO) has said it will continue to focus on investment in high-quality debt paper and keep away from equities.

There is debate whether EPFO should invest in equity for higher returns or not. However, it will not take the risk of doing so, according to Samirendra Chatterjee, Central Provident Fund (CPF) Commissioner.

He was addressing a seminar for bankers and fund managers of mutual funds on Retirement Funds’ organised by A K Capital Services.

It will continue to go for state development loans (state government bonds), bonds of triple-A rated companies, as well as PSUs.

Chatterjee said a new set of fund managers would be appointed very soon for the EPFO portfolio.

On the higher pay out of 9.5 per cent for 2010-11, Chatterjee said the finance ministry is yet to approve it. It should come any moment. However, the higher rate can’t be maintained for the next year, he added.

"We found a surplus of around Rs 1,700 crore when we analysed the accounts on accrual-based system. For the first time, EPFO have calculated the interest payable to the depositors on accrual basis to analyse the details of Rs 14,696 crore lying in the interest account,” he said.

There are over 3,000 recognised provident fund trusts, which manage a huge corpus of about Rs 2,00,000 crore. These trusts, which are set up by companies to manage the PF of their employees, have to pay a rate of return that is not less than the rate paid by EPFO.

"None of the recognised provident fund has approached us so far with a complaint that they cannot manage 9.5 per cent rate of return for this financial year," Chatterjee said.