EPFO’s investment committee recommends hike in equity exposure to 20%: Labour Ministry

The finance investment and audit committee of the  Employees' Provident Fund Organisation ( EPFO) has recommended increasing the equity exposure to 20 percent from the current 15 percent, and if the central board of the retirement fund manager accepts it later this month, the new pattern will kick in.

The move, once implemented, will cheer the stock market, and pump in more money to equities from the retirement fund body. The 20 percent equity exposure of EPFO will mean at least Rs 36,000 crore of PF money going to the equity market per annum.

According to the Union labour ministry, its equity exposure is getting good returns (notional). While in 2019-20, its equity exposure earned a negative 8.29 percent (COVID impact), in 2020-21, this garnered a 14.67 percent notional return. In FY22 ended March 31, it clocked a return of 16.27 percent against a 6.96 percent return given by 10-year government securities.

“The Finance Investment and Audit Committee (FIAC), a Sub Committee of CBT, EPFO has recommended for the proposal to increase investment in equity and related investments in category IV of the Pattern of Investment from 5-15 percent to 5-20 percent for consideration of CBT…,” the Union labour and employment ministry informed the Lok Sabha on July 18.