Retirement fund body EPFO is likely to approve a proposal to increase its investment in equities to 20 per cent from the current limit of 15 per cent this month. According to sources, the proposal will be considered and approved during the meeting of EPFO trustees to be held on July 29 and 30. Currently, EPFO can invest 5 to 15 percent of investable deposits in equity or equity-related schemes.
The proposal to revise the limit to 20 percent has been scrutinized and approved by the Finance Audit and Investment Committee (FAIC), an advisory body of the Employees Provident Fund Organization (EPFO). FAIC's recommendation will be placed before EPFO's highest decision-making body—the Central Board of Trustees (CBT)—for consideration and approval.
The Central Board of Trustees (CBT), headed by the Union Labor Minister, is likely to approve FAIC's recommendation to increase investmentin equity and equity-related schemes from the current 5-15 per cent to 5-20 per cent. In a written reply in the Lok Sabha on Monday, Minister of State for Labor and Employment Rameshwar Teli said, “The sub-committee of FIAC, CBTEPF has recommended a proposal to investment in CBT has reduced the investment pattern for EPF consideration from 5-15 percent to 5-20 percent.
EPFO started investing in Exchange Traded Funds (ETFs) in August 2015 with 5 per cent of its investable deposits in stock-linked products.
The notional return on EPFO's equity-linked investments has increased from 14.67 per cent in 2020-21 to 16.27 per cent in 2021-22 which had been a negative return during Covid. The response also pointed out that the notional rate of return on equity relatedinvestments of EPFO was negative at (-) 8.29 percent in 2019-20 due to the impact of Covid-19.
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