EPFO trustees to discuss equity investment proposal in Dec 19 meeting

Retirement fund body Employees' Provident Fund Organisation (EPFO) will discuss a proposal to invest a part of its over Rs 6 lakh crore corpus in equities in the meeting of its trustees on December 19.

According to the agenda circulated for the 205th meeting of EPFO's apex decision making body, the Central Board of Trustees (CBT), scheduled for December 19, the trustees would deliberate on investment challenges in the changed economic scenario.

We will deliberate on the issue in the next meeting, said Labour Minister Bandaru Dattatreya, who also heads the CBT.

Recently, a section of EPFO had favoured investment of a part of corpus in the shares of profit-making public sector blue chip companies.

During an informal meeting of the non-official EPFO trustees with the then Labour Minister Narendra Singh Tomar in October 2014, some trustees, particularly unionists, had suggested investment in shares of profit-making state-run firms.

Some other unionists, or employees' representatives, on board of the CBT had reservations about investment in equity in view of volatility in stock markets.

In CBT's last meeting in August, the proposed pattern of investment by the Finance Ministry was discussed and the board was not in favour of investing in equities and exchange traded funds (ETFs).

The CBT had decided to recommend making the pattern more flexible to further increase the percentage of investment in government securities.

The Finance Ministry has been pitching for investing a small portion of EPFO funds in the equity markets to maximise returns. In 2005, the ministry had allowed the retirement fund body to invest up to five per cent of its funds in equities and in 2008, it had enhanced the limit to 15 per cent.

A recent notification by the labour ministry allows the EPFO to invest up to five per cent of its funds in money market instruments, including units of mutual funds and equity-linked schemes regulated by capital market watchdog Securities and Exchange Board of India (Sebi).

The EPFO has over 50 million subscribers across the country. It provided interest of 8.75 per cent on PF deposits in 2013-14. The EPFO trustees have recently decided to keep the rate at the same level during the current fiscal as well.