EPFO’s Central Board of Trustees to meet on November 30, several investment related decisions to be taken up

The Central Board of Trustees of the Employees’ Provident Fund Organisation is set to meet for the first time this fiscal year on November 30 and will take up several important proposals around investments including the redemption policy for investments into equity traded funds.

According to sources close to the development, the CBT, which is the apex decision making body of the EPFO, will consider re-investing at least a part of the redemption proceeds from ETFs into equity and other investment assets as part of efforts to improve returns.

The retirement fund manager had begun investing in equities through ETFs in 2015-16 with an initial exposure of 5% of incremental deposits, which was later increased to 10%. It is now planning to further increase its exposure to 15%. According to its draft annual report, it had invested close to 9.5% of its investible corpus or close to Rs 2.35 lakh crore in ETFs by March 31, 2024.

Sources however, indicated that the EPFO does not plan to further increase its investments into ETFs at present or invest directly into equities. “This is the hard earned money of workers. We need to protect it from too much volatility. While equity markets are giving good returns now, it could not be the case always,” said an official source.

The CBT, chaired by Labour and Employment Minister Mansukh Mandaviya will also look into a proposal to specify guidelines for investments by EPFO in units of real estate investment trusts (ReITs) and Infrastructure Investment Trusts that are regulated by SEBI.

Besides, it will also review the annual performance of portfolio managers of the EPFO and also approve the draft annual report of the retirement fund body for 2023-24. A status note on the implementation of higher pension following the Supreme Court ruling will also be shared with the CBT.

Significantly, this will be the first meeting of the EPFO’s CBT under the new government at the Centre. Sources indicated that another meeting of the CBT is likely to take place in the next few months where reforms measures for the EPFO will be discussed.