EPFO plans to increase equity investment limit to 25% to make up shortfall



The Employees Provident Fund Organization (EPFO) is considering a proposal to increase its equity investment limit to 25% of incremental flows from the existing 15%, according to a report in the Economic period. The capital investment will be increased first to 20 percent, then to 25 percent in the second phase.

Earlier on Saturday, the government approved an 8.1% interest rate on ETH deposits for 2021-22, the lowest in four decades, for around 50 million subscribers to the EPFO.

EPFO’s idea of ​​gaining greater exposure to equities appears to be aimed at helping fill the gap in returns with investments in debt securities

According to ET’s report, the Financial Investments and Audit Committee met two weeks ago to discuss the issue of equity investments. The report says the proposal will be considered in June last week at a meeting of EPFO’s Central Board of Directors (CBT). The recommendation will be sent to the Ministry of Labor and the Ministry of Finance for final approval.

EPFO invests around Rs 1,800-2,000 crore in some exchange traded funds at its current level of 15%. According to the ET report, EPFO ​​receives total flows of Rs 600 crore every day on average and uses about Rs 200 crore to settle claims. EPFO officials met with mutual fund managers to assess the possibility of investing in equity programs.

The current EPF interest rate of 8.1% is the lowest since 1977-78, when it was 8%. The 8.5% interest rate on ETH deposits for 2020-21 was decided by the CBT in March 2021. It was ratified by the Ministry of Finance in October 2021. Subsequently, the EPFO has instructed field offices to credit interest income at 8.5 percent. cent for 2020-21 in the account of subscribers.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor

Comments are closed.