EPFO CBT expected to accept proposal to increase equity investment at next meeting

Amid volatile stock markets, the central board of the Employees Provident Fund is expected to adopt a proposal to increase equity investments to 25% from the current limit of 15%.

The BCT’s Investments and Finance Audit Committee has reportedly finalized a proposal to increase the investment limit for shares in two phases by 5% each.

“This is one of the cases pending before the EPFO. It will likely be picked up at the next meeting later this month,” a source familiar with the development said.

The CBT, which is EPFO’s supreme decision-making body, is due to meet on July 29 and 30.

Guarantee higher returns

The move aims to secure higher returns for provident fund subscribers, who will earn 8.1% interest in 2021-22, the lowest in four decades, from 8.5% in 2020-21.

The proposal, however, is likely to meet resistance, with many CBT members already indicating their intention to take over the status of EPFO’s current equity investments.

“The markets have been extremely volatile. We have to make sure that workers’ savings are protected. Any move to further increase EPFO’s exposure to equities will need to be discussed in detail,” two sources said.

“The timing of the proposal needs to be seen. At a time when the markets are not doing well, there should be no rush to invest more funds in stocks,” they further stressed.

The official agenda for the CBT meeting has yet to be formalized, but is expected to be sent to members later this month.

EPFO began investing in equities in 2015 with an initial cap of 5% of its total corpus, which was gradually increased to 15% of new inflows in 2017-18. A minimum of 45 percent and a maximum of 65 percent of new inflows are invested in government securities.

EPFO, which is the largest pension fund in the country, has a corpus of around ₹16 lakh crore.

Published on

July 15, 2022

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