To reap the benefits of EPFO’s several decades of experience in managing the government is considering turning the Employees’ Provident Fund Organization (EPFO) into a fund manager for investments of all social security entities. The plan is part of the mega recast being planned to deliver universal social security for 50 crore workers in the country.
Currently, SBI, ICICI Securities Primary Dealership, Reliance Capital, HSBC AMC and UTI AMC manage the corpus. EPFO on the other hand, focuses entirely on the social security fund collection and disbursement.
Going forward, as the role of EPFO changes so will the role of many professionals working in the organization. As the organizational structure changes, they would have to hire professional investment managers to handle the new responsibility.
Under the plan, fund managers at EPFO will ensure that investments are made as per the pattern in a manner that it yields a maximum return for investments. However, the finance ministry will continue to notify the investment pattern for the social security corpus. Also, even the rate of return on investments will be decided and declared by EPFO and it would be binding on states to implement it or give a higher return
Further, as part of the labor code on social security, the government plans to set up autonomous boards in states to collect and disburse all kinds of social security to its workers as it aims to increase the number of subscribers fivefold to more than 50 crore. As per the new system, a single window across states will be created for all kinds of social security including medical insurance, maternity benefits and disability cover.
Under the mega plan, firstly a pilot project will be launched in a few districts, and depending on its success, the idea would be later scaled up across India over the next few years. It would also depend on if the proposed legislation on social security code is passed in Parliament.
After this, while EPFO assumes the function of the fund manager, the funds from EPFO and ESIC will be gradually transferred to the states.