EPFO Reform Advice from RBI: Investment and Accounting
Why in the news
RBI reviewed EPFO and urged changes because its yearly interest rates run well above bond yields.
Key facts
- Largest retirement fund: over ₹25 trillion, nearly 300 million members.
- Diversify beyond government securities; use market-linked investing.
- Move from book-value to market-value accounting.
- EPFO both manages and regulates, so set up an independent regulator.
- Train the CBT and investment committee in portfolio, accounting and actuarial skills.
Current mix
| Asset | Range |
|---|---|
| Government securities | 45-65% |
| Debt instruments | 20-45% |
| Equities (index funds) | 5-15% |
| Short-term debt | 0-5% |
- FY19-FY25: EPFO rate 8.1%-8.5% versus roughly 6.5%-7% on 10-year G-Secs.
Exam angle
- Advice sought by the Labour Ministry.