A plan to increase EPFO’s equity participation from the existing cap of 15% to up to 20% is likely to be approved this month.
The retirement fund organization EPFO is likely to adopt a proposal this month to increase its equity investments from the existing cap of 15% to up to 20% of the investible deposits.
The idea is anticipated to be discussed and approved during the EPFO trustee’s meeting, scheduled for July 29 and 30.
EPFO can put between 5 and 15% of investable deposits into stock or equity-related schemes.
The Finance Audit and Investment Committee, an advisory body to the Employees’ Provident Fund Organization (EPFO), has examined and accepted the request to change the maximum to 20%. (FAIC).
The EPFO’s top decision-making body, the Central Board of Trustees (CBT), will review and approve the FAIC’s proposal.
The suggestion of the FAIC to increase the equity investment and equity-related schemes from the current 5-15% to 5-20% is expected to be approved by the Central Board of Trustees (CBT), which is presided over by the Union Labor Minister, the source added.
FIAC, a subcommittee of CBT, EPF, has recommended the proposal to increase investment in equity and related investments in category IV of the Pattern of Investment from 5-15% to 5-20% for consideration of CBT, EPF, according to Minister of State for Labour and Employment Rameshwar Teli’s written response to Lok Sabha on Monday.
In August 2015, EPFO began buying Exchange Traded Funds (ETFs), investing 5% of its investible deposits in securities. It was increased for the current fiscal year to 15%.
Trade unions have opposed EPFO’s investments in the stock market since a government guarantee does not support them.
The notional return on EPFO equity-related investments increased from 14.67% in 2020–21 to 16.27% in 2021–22, according to Mr. Teli’s written response.
The response also revealed that COVID-19’s effects caused the EPFO’s national rate of return on equity-related investments to be negative in 2019–20, at (–) 8.29 percent.
The minister said that in 2021–2022 EPFO resolved 2,88,15,498 subscriber withdrawal requests totaling 1,04,959.18 crore.
In 2020–21, EPFO resolved 2,33,90,550 claims for a total of 91,187.54 crore. In 2019–20, the EPFO paid 1,28,77,354 claims for a total of 70,202.34 crore.
