New Delhi: Retirement fund body EPFO may this month approve a proposal to increase its investment in equities to 20 per cent from the existing 15 per cent limit. According to a source, the proposal is expected to be considered and approved during the EPFO trustees’ meeting to be held on July 29 and 30.
At present, EPFO can invest 5 to 15 per cent of investible deposits in equity or equity-linked schemes. The proposal to revise the limit to 20 per cent has been revised and approved by the Finance Audit and Investment Committee (FAIC), the advisory body of Employees’ Provident Fund Organization (EPFO).
The recommendation of FAIC will be placed before the Central Board of Trustees (CBT), the apex decision-making body of EPFO, for consideration and approval. “The Central Board of Trustees (CBT) chaired by the Union Labor Minister may approve the recommendation of FAIC to increase investment in equity and equity-related scheme to 5-20 per cent from the existing 5-15 per cent,” the source said.
Rameshwar Teli, Minister of State for Labor and Employment, in a written reply in Lok Sabha on Monday said, “The CBT, a sub-committee of EPF, FIAC has recommended for a proposal to increase investment in equities and related investments in Category IV. The investment pattern for consideration of CBT, EPF ranges from 5-15 per cent to 5-20 per cent. The EPFO started investing in Exchange Traded Funds (ETFs) in August 2015 and invested 5 per cent of its investible deposits in stock-linked products. For the current financial year, it has been increased to 15 per cent. The trade unions are opposing any investment by the EPFO in the stock markets as these are not backed by government guarantees.
In the written reply, Teli also said that the estimated return on investment related to EPFO equity has increased from 16.27 per cent in 2021-22 to 14.67 per cent in 2020-21. The reply also revealed that EPFO’s notional rate of return on equity related investments was negative at (-) 8.29 per cent in 2019-20 due to the impact of COVID-19.
In 2021-22, the minister said that EPFO settled 2,88,15,498 claims of withdrawal of Rs 1,04,959.18 crore by subscribers. EPFO had settled 2,33,90,550 claims for withdrawal of Rs 91,187.54 crore in 2020-21. The withdrawal amount in 2019-20 was Rs 70,202.34 crore as against 1,28,77,354 claims settled by the EPFO.
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