The Hindu Business Line : Mercer Consulting to help PF body improve performance

THE Central Provident Fund authority is set to appoint Mercer Consulting as its investment consultant. A formal agreement will be signed shortly, after which Mercer will be given about four months to submit its report to the board of trustees.

Mercer will help in creating both short and long-term investment strategies for the PF organisation with a view to improve the performance of the fund. It will have to adhere to the overall investment framework that is now in place.

"Officially, the mandate is yet to be given. The consultant will work out for us what it considers is the right methodology. It will also suggest ways to upgrade performance", said Dr Ajai Singh, Central Provident Fund Commissioner.

He was addressing the members of the Bengal Chamber of Commerce at a seminar on pension funds on Saturday.

The challenges before Employees' Pension Scheme 1995 (EPS '95) are many, it is pointed out. Non-pensionable exits are much higher than pensionable exits. There is a lack of proper investment avenues, while there are increased probabilities of defaults. Judicial remedies are inadequate and the investment pattern is quite inflexible. The Special Deposit Scheme, incidentally, will not be available in future.

Dr Singh also mentioned that the fifth and sixth valuation reports had both recorded deficits; such deficit in fact was likely to go up further when the seventh report was placed. These, however, were not cash deficits, but some corrective action might be taken in view of their occurrence, he added.

The absence of a nationally recognised unique number for social security is also an important issue that has to be addressed. Jobs are being changed frequently and employees these days tend to resign and take up new employment relatively easily. This makes the creation of a unique number for each worker so significant.

"Labour in India has become more mobile. Yet, there is a lack of portability in balances, entitlements and pensions", he said, adding while underlining the value of a central record-keeping organisation.

The reform process that has started at EPF stands on two legs, administrative and policy. Administrative reforms have pertained to re-engineering of business processes and changing from single-entry accounting to double-entry accounting.

These have also related to centralisation of record keeping and back office transaction processing.

Policy initiatives relate to improving fund performance and changing management/leadership styles.

Incidentally, there have been reform efforts in association with IIM Ahmedabad and XLRI Jamshedpur to address management issues, it is pointed out.

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