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Govt Plans to Hike EPFO Investments in Equity

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The government plans to increase the share of provident fund corpus being invested in stocks despite prevailing low yield on equity investments in yet another move that could face strong resistance from central trade unions.
“Equity investment is a long-term process and there is going to be an upward trend in investment in equity,“ labour minister Bandaru Dattatreya said on Tuesday while outlining his ministry's achievements in last two years of Narendra Modi government. “A complete report will be presented in the CBT (central board of trustees) meeting of EPFO (Employees Provident Fund Organisation) soon and a final decision will be taken,“ he said.
The move will most probably put off trade unions.
Last year, the government had bulldozed the voice of unions to implement its decision to invest 5% of annual inflows into retirement fund corpus in exchange-traded funds.
EPFO, which functions under the labour ministry, incurred a loss of around Rs. 300 crore on its investment in stocks in the year ended March 31.Dattatreya, however, said that till April 30, 2016 there has been a return of 1.68%. CBT comprises the representatives of employees, employers and the government and is the apex decision-making body of EPFO with labour minister as its chairman.
In the last financial year, the finance ministry asked EPFO to invest between 5% and 15% of its incremental corpus in equities, but EPFO decided to invest only 5% of it.
In August 2015, the retirement fund manager entered the equities market for the first time. channelling its investments through two exchangetraded funds.
The Economic Times New Delhi,25th May 2016

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