Govt issues fresh guidelines to ports for pension fund investment

The shipping ministry has issued fresh guidelines to change the existing investment pattern of pension, provident and surplus funds of 12 major ports, with an aim to improve returns by additional Rs 150 crore per annum. At present, pension, provident and surplus funds at major ports add up to around Rs 33,000 crore, yielding interest of around Rs 2,700 crore.

A diverse set of initiatives have been taken as part of a drive to boost profitability across major ports, including improving the returns earned on treasury investments by the ports for pension, provident and surplus funds, Ministry of Shipping said in a statement today.

“Across all major ports, these funds add up to around Rs 33,000 crore, yielding interest of around Rs 2,700 crore. Looking for ways to push this amount further, the Ministry has realised an opportunity to improve returns by Rs 150 crore or more through a strategic shift in its guidelines for provident and surplus funds,” it said.

Major ports have been investing their provident and surplus funds in the fixed deposits of nationalised banks, earning returns in the range of 5.5 to 8 percent, it said.

However, many PSUs have enjoyed significantly better returns, it said adding that ONGC earned 8.4 percent returns through Oil Corporation of India and Government of India special bonds; RECL earned 10 to 11 per cent through Tier I bonds of the UP Power Corporation and SBI bonds.

“Realising the potential to earn higher returns, the Ministry of Shipping has evaluated its recommended investment pattern in comparison to the frameworks followed by other PSUs and government bodies. After a detailed study of investment options available and their achieved performances, the Ministry of Shipping has issued fresh guidelines to all the major ports on the investment of provident funds… and on the investment of surplus funds,” the statement said.

The fresh guidelines are based on guidelines issued by Ministry of Labour and Employment and Department of Public Enterprises, Ministry of Heavy Industries & Public Enterprises.

“These new guidelines are expected to increase the returns of provident and surplus funds by 1 to 1.5 per cent across ports, adding around Rs 150 crore annually to the current earning figures,” the ministry said.

With the new guidelines, many ports, including Kandla, Goa, JNPT, New Mangalore and Visakhapatnam are all set to switch the investment pattern with higher rate of return.

The financial benefit estimated will show up in the books of accounts of major ports from 2018-19.

Treasury investments at India’s 12 major ports – Kandla, Mumbai Port Trust, JNPT, Goa, New Mangalore, Cochin, Tuticorin, Chennai, Ennore, Vishakhapatnam, Paradip, and Kolkata/Haldia are governed by Section 88 of the Major Ports Trust Act, 1963.

The Act mandates that investments pertaining to pension, provident and surplus funds adhere to the guidelines issued from time to time by the central government.