Challenge for EPFO as gap between govt yields and scheme's returns widen

EPFO invests mostly in central and state govt securities. Its earnings from these instruments are largely used to pay interest to its subscribers

There is a widening gap between what the Indian government’s premier retirement fund makes on its investments and what it offers to employees.

The Employees’ Provident Fund Organisation (EPFO) makes the bulk of its investments in government related securities. In other words, it lends to central and state governments and related entities. The interest it gets from these instruments is largely what it uses to pay interest to its subscribers. The interest on government borrowings has been coming down. This has meant that the gap between what the EPFO makes and what it pays out may have widened to levels