EPFO should increase equity investment limit to 20%: report

The Employees Provident Fund Organization (EPFO) is expected to adopt a proposal this month to increase its equity investments from the current limit of 15% to 20% of investable deposits. According to a source, the idea is expected to be discussed and approved at the EPFO ​​trustee meeting scheduled for July 29-30. The pension fund organization currently has the flexibility to invest 5-15% of investable deposits in equity-linked plans.

The Finance Audit and Investment Committee, an advisory body to EPFO, reviewed and approved the request to change the maximum to 20%. (FAIC). EPFO’s main decision-making body, the Central Board of Trustees (CBT), will review and approve the FAIC’s recommendation.

“The Central Board of Trustees (CBT) headed by the Union Labor Minister is likely to endorse FAIC’s recommendation to increase investment in equity and stock-linked programs to 5-20% from 5 -15% existing,” the source said. .

In a written response to Lok Sabha on Monday, Minister of State for Labor and Employment Rameshwar Teli said: “FIAC, a sub-committee of CBT, EPF, has recommended for the proposal to increase equity investments and related investments in category IV of the 5-15% to 5-20% investment model for CBT review, ETH.” EPFO had started investing in exchange-traded funds (ETFs) in August 2015, placing 5% of its investable deposits in equity-linked products. It has been increased to 15% for the current financial year.

As the stock markets are not backed by a state guarantee, the unions opposed any EPFO ​​investment in them. The notional return on investments linked to EPFO ​​shares increased from 14.67% in 2020-2021 to 16.27% in 2021-2022, according to Teli’s written response.

The response also revealed that the effects of COVID-19 resulted in a negative EPFO ​​notional rate of return on equity-linked investments in 2019-20 at (–) 8.29%. According to the ministry, the EPFO ​​resolved 2,88,15,498 subscriber requests for withdrawals of 1,04,959.18 crores in 2021-2022.

In 2020-2021, EPFO ​​settled 2,33,90,550 claims totaling 91,187.54 crore. A total of 70,202,34 crores were withheld in 2019-20 under 1,28,77,354 claims that EPFO ​​had resolved.

(With PTI inputs)

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