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Amidst volatile stock markets, the Central Board of Trustees of the Employees’ Provident Fund Organisation is expected to take up a proposal to increase equity investments to 25 per cent from the current limit of 15 per cent.
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 per cent 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.
Ensuring higher returns
The move is aimed at ensuring higher returns for provident fund subscribers, who will earn 8.1 per cent interest in 2021-22, which is the lowest in four decades, as against 8.5 per cent 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.
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The centralised system will facilitate de-duplication and merger of all PF accounts and would remove the requirement of account transfer on a job change.“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 further pointed out.
A formal agenda for the CBT meeting is yet to be formalised but is expected to be sent to members later this month.
The EPFO had started investing in equities in 2015 with an initial cap of 5 per cent of its total corpus, which was gradually increased to 15 per cent of fresh inflows in 2017-18. A minimum of 45 per cent and a maximum of 65 per cent of the fresh inflows are invested in government securities.
The EPFO, which is the country’s largest retirement fund, has a corpus of about ₹16 lakh crore.
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