EPFO Likely To Increase Investment Limit In Equities To 20 Per Cent: Report

EPFO currently can invest 5 to 15 per cent of the investible deposits in equity or equity-related schemes

The proposal to revise the limit to 20 per cent has been vetted and approved by the EPFO advisory body Finance Audit and Investment Committee ( Image Source :Getty )

Employees’ Provident Fund Organisation’s (EPFO), retirement fund body, is likely to approve a proposal to raise its investments in equites to up to 20 per cent of the investible deposits from the current limit of 15 per cent this month, the PTI reported.

Citing a source, the PTI said the proposal is expected to be considered and approved during the EPFO trustees’ meeting scheduled to be held on July 29 and 30.

EPFO currently can invest 5 to 15 per cent of the investible deposits in equity or equity-related schemes. The proposal to revise the limit to 20 per cent has been vetted and approved by the EPFO advisory body Finance Audit and Investment Committee (FAIC).

The recommendation of FAIC will be placed before the EPFO apex decision making body, Central Board of Trustees (CBT), for consideration and approval.

“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 per cent from existing 5-15 per cent,” the source said.

Minister of State for Labour and Employment Rameshwar Teli, in a written reply to Lok Sabha on Monday, 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 per cent to 5-20 per cent for consideration of CBT, EPF.”

EPFO had started investing in Exchange Traded Funds (ETFs) in August 2015, putting 5 per cent of its investible deposits in stock-linked products. It was raised to 15 per cent for the current fiscal year.

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

Teli also said the notional return on EPFO equity-related investments rose 16.27 per cent in 2021-22 from 14.67 per cent in 2020-21.

The reply also showed that the notional rate of return on equity related investment of the EPFO was in negative at (-) 8.29 per cent in 2019-20 due to the impact of Covid. In 2021-22, the minister said EPFO settled 2,88,15,498 claims for withdrawal of Rs 1,04,959.18 crore by the users.

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