EPF Equity Exposure: Preparations are being made to invest more part of the employee’s PF money in the stock market.
EPF Equity Exposure: Preparations are being made to invest more part of the employee’s PF money in the stock market. The Central Board of Trustees (CBT), the decision-making body of the Employees’ Provident Fund Organization (EPFO), is scheduled to meet in Bengaluru on June 25-26. In this meeting, there will be a discussion on raising the equity exposure of EPFO to 25 percent. However, this will be done in a phased manner and for fresh annual deposits. At present the equity exposure is maximum 15 per cent. EPFO maintains 24 crore accounts of its members, with a capital of about Rs 17 lakh crore. It gets a capital of Rs 2.3 lakh crore annually from 65 lakh active subscribers.
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There will be scope for higher returns on PF deposits
Due to the fall in investment income, the EPFO announced an interest rate of 8.1 percent on PF deposits for the financial year 2021-22, which is the lowest in the last four decades. Due to this, the Finance Investment and Audit Committee (FIAC), a sub-committee of the CBT, in its meeting last month, considered raising the maximum limit for investment in equity from 5-5 per cent to 15-25 per cent in two phases so that higher returns to EPF members. So to receive. According to FIAC and CBT member KE Raghunathan, the sole purpose of these efforts is to increase the returns of EPF members. The recommendations of the FIAC will be considered by the CBT and will then be sent to the Finance Ministry for approval.
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What is the investment pattern now?
At present, EPFO invests 45-65 per cent in government securities, 20-45 per cent in debt instruments, up to 5 per cent in short term debt instruments, up to 15 per cent in equities, up to 5 per cent in other options such as trusts etc. EPFO invests in equities in the form of Exchange Traded Funds (ETFs) on Nifty and Sensex. EPFO has started investing in ETFs from 5th August 2015 and earlier its limit was 5 per cent which increased to 10 per cent in 2016 and maximum 15 per cent in the next year 2017.