NEW DELHI: Pension fund EPFO ​​on Saturday dropped a last-minute proposal to increase investment in shares or equity-like instruments to 20% from the existing 15%.
The proposal, which had met opposition from workers’ representatives and unions, was part of the agenda to be dealt with at the EPFO’s Central Board of Trustees meeting, but was dropped without explanation.
At the level of the EPFO ​​advisory body, the EPFO, discussions have taken place on how the pension body should be structured Audit and Investment Committee (FAIC), but the government felt further deliberations in the FAIC were necessary before a final decision was made. The next meeting of the FAIC could take place as early as next week, while the CBT is expected to meet at the end of September this year.
Sources said the issue the government is grappling with is whether or not that 15% should apply to the entire corpus of over Rs 18 lakh crore available at the EPFO ​​since the law came into force in 1952 the government should introduce a mechanism, in a phased manner, to increase investment in equity to reach the 15% limit. While 15% is the cap for stock investments, it currently only applies to a portion of the retirement savings body on an annual basis. “EPFO is unlike any other investment-oriented scheme because it must ensure not only sustainable income but also secure, risk-free returns,” said one official.
Sources said the Labor Department will be reviewing such policies, among other policies Regulatory Development Authority for Pension Funds (PFRDA) handles equity investments for its corpus, although it may be difficult to draw parallels since, unlike EPFO, PFRDA is a contribution fund where subscribers are informed of the risks involved.