The Employees' Old Age Benefits Institution (EOBI) earned Rs 20.386 billion during 2006-07 on its total portfolio investment of more than Rs 131 billion, it was learnt on Thursday. The total portfolio of the EOBI as on June 30, 2007 was Rs 131,257.677 million.
This comprises government securities Rs 101,417.100 million (77.3%). Other securities Rs 652.251 million (0.5%), equity Rs 20,550.204 million (15.7%), strategic holding Rs 4,754.501 million (3.5%), and real estate Rs 3,883.621 million (3.0%).
Government securities include Defence Savings Certificates, Pakistan Investment Bonds, and tenth issue of Wapda bonds. Other categories include term finance certificates (TFCs), certificate of investments (COIs), term deposit receipts (TDR), short notice term deposit (SNTD) and short saving deposit (SSD).
The budget estimates for the year 2006-07 earnings was Rs 18.50 billion, whereas, the Institution has earned Rs 20.386 billion which is Rs 1.886 billion above the target.
Talking to Business Recorder Chairman of the Institution Brigadier Akhter Zamin (retired) said that as per actual valuation the resources/funds at the disposal of the EOBI would start depleting in coming years and would be totally exhausted by 2036. "We have to look beyond that," he added.
He said that all investment EOBI makes should earn more than 16.5 percent per annum at an average. However, the Institution is set to invest in real estate more so that some arrangement could be made to meet requirement beyond 2030.
For this purpose the EOBI has acquired land in Islamabad to construct an office plaza, ground plus nine. This all would be for rental purposes. Another project for which preparations have been finalised is ground plus five building. This would be constructed at the old site where EOBI's offices were originally located in the Nursery area of Karachi. This project would have housing, offices and shopping units. These units would be for outright sale.
The third project of the EOBI would come up on a plot of 10,000 square acquired from Pakistan Railways at a cost of Rs 181,000 per square yards. EOBI has purchased this land in open bidding. This piece of land was so far in use of the National Logistic Cell (NLC).
The fourth project EOBI has finalised is the construction of a luxury hotel in Lahore on a piece of land acquired from the ministry of defence. This hotel will be given to professional management in the private sector and the EOBI would protect its interest either through rental arrangement or through any other mechanism of partnership.
He said, in addition, the federal government had been approached to resume provision of matching contribution in terms of section 9-A of the EOB Act. "We are taking every possible step for making the scheme viable and self-sustaining for at least the next fifty years - till 2056." He said that efforts were being made to bring into the EOBI net establishments that were still not registered and cargo-handling companies.
To a question regarding investment in stock exchange, Zamin said that the institution was following a prudent investment policy of diversification geared toward investment in market driven securities in business that were fundamentally sound having consistent dividend history. The broad based institution objective is to ensure safety and security of funds through the policy of diversification as provided in the EOBI (Investment) Rules, 1979.
These rules provide maximum investment in share up to 50 percent of the portfolio. The rules provide basic criteria for investment in companies having earning record of more than 20 percent for the last two years preceding the year in which the investment is made, subject to maximum limit of 25 percent of paid up capital in any one company or 2.5 percent of the portfolio whichever is lower.
Explaining further Zamin said that the institution strategy therefore remained restricted to investment in bluest of the blue chips stock of companies having potential of higher dividend, or higher capital gain or both.
The ban on institutional investment in NSS, the huge upcoming maturities, limited investment options and low interest rates scenario were some of the factors challenging viability of the fund compelling the institution to find alternate investment avenues within the investment parameters as laid down by the EOBI (investment) Rules 1979.