EPFO drops proposal to raise equity investment limit to 20% – Times of India

NEW DELHI: Retirement fund physique EPFO on Saturday dropped on the final minute a proposal to hike investments in equities or equity-related devices from the present 15% to twenty%.
The proposal, which had met with resistance from staff’ representatives and commerce unions, was a part of the agenda gadgets scheduled to be taken up on the assembly of the EPFO’s central board of trustees however was dropped with out citing any motive.
Discussions on how the retirement fund corpus must be invested have been held on the stage of the EPFO advisory physique, the Finance Audit and Funding Committee (FAIC), however the authorities felt the necessity for additional deliberations in FAIC earlier than a ultimate choice is reached. The following assembly of the FAIC could also be as early as subsequent week, whereas the CBT is more likely to meet on the finish of September this 12 months.
Sources mentioned the query that the federal government is grappling with is whether or not this 15% ought to apply to all the corpus of over Rs 18 lakh crore accessible with EPFO because the regulation got here into being in 1952, or if the federal government ought to institute a mechanism, in a phased method, to bump up funding in fairness to achieve the 15% restrict. Although 15% is the higher restrict for fairness investments, at current, it solely applies to a portion of the retirement corpus on an annual foundation. “EPFO is in contrast to every other investment-oriented scheme because it should not solely guarantee sustained revenue but additionally secure, risk-free returns,” an official mentioned.
Sources mentioned the labour ministry will even study, amongst different methods, how the Pension Fund Regulatory Growth Authority (PFRDA) handles fairness investments for its corpus, regardless that it might be tough to attract parallels since PFRDA, in contrast to EPFO, is a contributory fund the place subscribers are knowledgeable in regards to the dangers concerned.


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