HomeNATIONEPFO Updates: EPFO Set to Increase Equity Investments to 20 Percent

EPFO Updates: EPFO Set to Increase Equity Investments to 20 Percent

EPFO Updates: The Employees’ Provident Fund Organisation is set to enhance equity investments to up to 20 percent. The statutory body is likely to approve a proposal regarding this within a month, thus increasing the percentage from 15 percent to up to 20 percent of the investible deposits.

According to a source, the proposal is expected to be considered and approved during the EPFO Central Board of Trustees meeting scheduled to be held on July 29 and 30.

The proposal to revise the limit to 20 percent has been vetted and approved by the EPFO advisory body, the Finance Audit and Investment Committee (FAIC).

“The Central Board of Trustees (CBT) headed by Union Labour Minister is likely to approve the recommendation of the FAIC for increasing the investment in equity and equity related scheme to 5-20 percent from existing 5-15 percent,” the source said.

In a written reply to Lok Sabha on Monday, Minister of State for Labour and Employment Rameshwar Teli said, “FIAC, a sub-committee of CBT, EPF, has recommended for the proposal to increase investment in equity and related investments in category IV of the Pattern of Investment from 5-15 percent to 5-20 percent for consideration of CBT, EPF.”

The EPFO began investing in Exchange Traded Funds in August 2015, at the time putting a mere 5 percent of investible deposits in stock-linked products. This was raised to 15 percent for the current fiscal year.

Trade unions have been opposing any investment in stock markets by EPFO as these are not backed by a government guarantee.

In the written response, the Minister also stated that the notional return on EPFO equity-related investments rose from 14.67 percent in 2020-21 to 16.27 percent in 2021-22

Also, due to the impact of COVID-19, the notional rate of return on equity-related investment of the EPFO was negative at – 8.29 percent in 2019-20.

Teli mentioned that in 2021-22, EPFO settled 2,88,15,498 claims for withdrawal of Rs. 1,04,959.18 crore by the subscribers.

EPFO had settled 2,33,90,550 claims for withdrawal of Rs. 91,187.54 crores in 2020-21. The withdrawal amount was Rs. 70,202.34 crores in 2019-20 under 1,28,77,354 claims paid by the EPFO.

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