EPFO Updates: Members of the Central Board of Trustees of the Employees’ Provident Fund Organisation are set to discuss the state of current equity investments amidst volatile stock markets. The CBT is expected to go ahead with a proposal to increase equity investments to 25 percent from the current limit of 15 percent.
The Finance Investment and Audit Committee of the CBT is understood to have finalised a proposal to hike the investment limit for equities in two phases by five percent each.
“This is one of the pending matters before the EPFO. It is likely to be taken up at the next meeting later this month,” said a source, familiar with the development. The CBT, which is the apex, decision-making body of the EPFO, is set to meet on July 29 and 30.
The decision is made to ensure higher returns for employees, who will now are earning 8.1 percent interest in 2021-22, which is the lowest in four decades, especially compared to the 8.5 percent in 2020-21.
The proposal, however, is likely to face resistance, with many CBT members already indicating their intent to take up the state of current investments of the EPFO in equities.
“Markets have been extremely volatile. It has to be ensured that savings of workers are protected. Any move to further increase exposure of EPFO to equities will have to be discussed in detail,” two sources said.
“The timing of the proposal has to be seen. At a time when markets are not doing well, there should not be a hurry to invest more funds in equities,” they pointed out.
A formal agenda has not yet been finalised for the CBT meeting but is anticipated to be sent to members by this month.
The EPFO had started investing in equities in 2015 with an initial cap of 5 percent of its total corpus, which was gradually increased to 15 percent of fresh inflows in 2017-18.
A minimum of 45 percent and a maximum of 65 percent of the fresh inflows are invested in government securities.
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