Home » To maintain EPFO viable, officers give House panel radical concept | India News

To maintain EPFO viable, officers give House panel radical concept | India News

by newsking24

NEW DELHI: Top labour ministry officers on Thursday advised a parliamentary panel on labour that for pension fund just like the EPFO to stay viable, it should transfer from the prevailing system of “defined benefits” to a system of “defined contributions”, the place members draw advantages commensurate with their contributions.
Sources mentioned officers advised the panel that EPFO had over 23 lakh pensioners drawing Rs 1,000 per 30 days even when their contributions to the fund corpus had been lower than a fourth of the advantages they had been drawing. They additionally mentioned this is able to be unviable for the federal government to assist in the long term, except a system of “defined contributions” was put in place.
Last yr, the committee had questioned labour ministry on its failure to implement an August 2019 suggestion of the central board of trustees of EPFO to lift minimal month-to-month pension beneath the EPF Pension Scheme to Rs 2,000 or Rs 3,000. Sources advised TOI the ministry had mentioned elevating minimal month-to-month pension to Rs 2,000 per subscriber would entail an extra monetary burden of practically Rs 4,500 crore, and Rs 14,595 crore, if it had been raised to Rs 3,000 per 30 days.
In Thursday’s assembly, officers additionally conceded earlier than the panel {that a} chunk of EPFO funds invested within the inventory markets had changed into dangerous investments and yielded unfavorable ends in the aftermath of the coronavirus-induced upheaval.
Quizzed over the “very glaring” unfavorable returns the fund’s investments had earned in March final yr, the House panel had final October requested EPFO central commissioner Sunil Barthwal and labour secretary Apurva Chandra to clarify why EPFO funds had been invested within the inventory market in March 2020 when the coronavirus-induced volatility had upended markets and investments might have been averted. The panel had pointed, particularly, to the publicity of EPFO funds to the debt-laden IL&FS and different housing funds.
Sources mentioned officers knowledgeable the committee that solely Rs 4,600 crore of the overall Rs 13.7 lakh crore fund corpus of EPFO — totalling 5% of the corpus — is invested within the markets. Chandra and Barthwal additionally advised the panel that the federal government is deliberating on methods to make sure that EPFO funds are invested in merchandise and schemes which are “not fraught with risk”.

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