The Employees’ Provident Fund Organisation (EPFO) is likely to discuss raising its equity investment limit from 15 percent to 25 percent at its upcoming board meeting next month, said people aware of the matter, reported Economic Times.
The board could also take up administrative issues and hold further deliberations and finalisation of the recommendations of the four sub-committees formed under the EPFO, they said.
These four sub-committees pertain to establishment-related matters, futuristic implementation of the Social Security Code, building up digital capacities and pension-related issues of the EPFO.
“The 231st meeting of the Central Board of Trustees (CBT) of EPFO will be held on July 8 and 9 in Bengaluru,” the retirement fund body announced.
The CBT comprises representatives of employers, employees and central as well as state government and is headed by the labour minister. The EPFO has not yet made the agenda of the meeting public.
The Finance Investment and Audit Committee (FIAC), a subcommittee of the CBT, at its meeting last month discussed raising the investment ceiling in equities in two equal phases of 5 percent each to ensure higher returns for EPF members.
This was triggered by the steep reduction in interest rate on PF deposits to 8.1 percent for 2021-22 from 8.5 percent for the preceding fiscal.
The proposal to raise equity investments could face stiff resistance from trade unions since there is no government-backed guarantee on such investments.
It would also require the finance ministry to change its investment pattern which allows the EPFO to invest up to 15 percent of its incremental income in the equity market.
The EPFO recently notified the interest rate of 8.1 percent for 2021-22, which is the lowest in more than four decades and would impact the retirement savings of nearly 60 million subscribers.
It credited 8 percent interest for 1977-78. Since then, the interest rate has been at least 8.25 percent.