One of the biggest criticisms of the Employees Provident Fund Organisation (EPFO) is that it is one of the most expensive such programmes in the world. Right now, the EPFO charges over 4.6% of annual contributions as its administrative charge, an amount that is many times over what mutual funds charge. While the EPFO offers a lot more facilities than a mutual fund doesit has a pension and also a life insurance, albeit only for those with low salariesthe amount is excessive.
An FE analysis shows that over the years, EPFO has a surplus of over R10,000 crore under this head. It spent R1,298 crore a year on administrative expenses while it charged R3,081 crore in FY12. If the EPFO is to invest this at even 8% rates, this will generate enough funds to meet around two-thirds of its annual expenses. So, EPFO can actually slash its charges dramatically and still meet its annual expenses. Since the EPFO is busy reinventing itselfit promises online account details soon along with a single number that can be ported across jobs and citiesthis could help it become one of the more efficient fund managers in the world.