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The Employees’ Provident Fund Organisation (EPFO) is planning to hire a consultant for monitoring its bond investment. This move follows EPFO’s arduous struggle to recover nearly Rs 1,400 crore that it invested in Infrastructure Leasing and Financial Services (IL&FS) and Dewan Housing Finance Corp. Ltd (DHFL), which was later declared bankrupt.
Stricter monitoring
EPFO is a social security body that operates the country’s largest and compulsory state pension scheme. It facilitates saving money and creating a corpus for the retirement, of the people employed in the workforce.
The Parliamentary standing committee on labour recently said in the upper house that EPFO’s proposal seeking a consultant has been accepted. The committee also criticised EPFO for the delay it caused in protecting the statutory social security deposits of its subscribers.
BJD MP Bhartruhari Mahtab who headed the committee said that in order to establish a stronger and more stringent monitoring mechanism a third-party consultant should have been appointed by now. This move will make sure there is a strong performance review of the investments made that will subsequently assure safe and sensible investment of the corpus.
This move will help in securing the investments made by the EPFO and subsequently the retirement corpus of professionals. Under a strict review system, investments will remain safe from the perils of mismanagement and from making losses, and this will benefit the working people in return.
The labour ministry in 2019-20, just prior to the Covid-19 outbreak had put forth a proposal seeking EPFO to get the first right to the assets of a company about to go bankrupt. In addition to this, it also proposed two categories of companies in terms of payments of such high priority. The first were companies where EPFO had investments, like IL&FS and DHFL, and the second was for companies that owe money to their employees as a part of the obligations put in place by EPFO. Unfortunately, the proposal didn’t make any progress and EPFO lost access to close to Rs 574 crore in IL&FS and Rs 800 crore in DHFL.
All the funds of EPFO are invested strictly in accordance with the investment pattern with the help of appointed portfolio managers, said a report citing the labour ministry. The organisation is in touch with concerned authorities in SEBI and other dispute regulation bodies to extract the retirement funds from these companies.