The Employees Provident Fund Organisation (EPFO) may propose to invest up to 15 per cent of its investable amount in equity markets during the next fiscal, Union Labour Minister Bandaru Dattatreya has said.
“We are proposing to invest up to 15 percent during the next year. The Central Board of Trustees (CBT) meeting will be held on March 30. We will seek its opinion. So far, during the past one-and-a-half year we have invested Rs 18,069 crore. We are getting a good yield. It is encouraging,” Dattatreya said, according to a PTI report.
Here are 6 things to know about the EPFO investment in the equity market:
1. So far in the current year, the Provident Fund body invested the amount in the two index-linked ETFs (Exchange Traded Funds) — the BSE’s Sensex and the NSE’s Nifty.
2. The indicators yielded a return of 18.13 percent, according to the minister. He said the investment proposal will be put in the CBT meeting to be held on March 30 for the final call.
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3. Dattatreya said the EPFO through fund managers had invested 14700 crores in ETFs in the current financial year.
4. A senior official said the Ministry of Finance gave its consent to the EPFO to increase investment from 5 per cent to 15 per cent of the investable income of the organization every year.
5. This year the investable income would be about Rs 1.40 lakh crore, the official said. Investable income is the net income of the EPFO from the investments it had already made in various forms, fresh contributions, among others.
6. The EPFO had started investing in ETFs in August 2015. EPFO manages a corpus of over Rs 8 lakh crore, said the PTI report.
Recently, the government has announced that they will amend the EPF scheme to enable around 4 crore members of retirement fund body EPFO to withdraw up to 90 percent of their fund for making down payments while buying homes. The amendment in the scheme will also allow the Employees’ Provident Fund Organisation (EPFO) subscribers to use their EPF accounts for paying equated monthly installments (EMIs) of home loans.
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Under the new proposed provision in the EPF scheme, EPFO subscribers would have to form a cooperative society with at least 10 members for availing the facility. “The government has taken a decision for modification in the Employees’ Provident Funds (EPF) Scheme, 1952, to add a new paragraph 68 BD,” Labour Minister Bandaru Dattatreya said in a written reply to Rajya Sabha on a query about the Housing Scheme for the members of EPFO.