EPFO postpones increase in equity investment ceiling

The Central Board of Directors (CBT) of the Employees Provident Fund Organization (EPFO) postponed its decision on raising the limit for equity investment from 15% to 20% at a meeting Saturday, citing the volatile market situation.

The board has agreed in principle to the idea of ​​a higher equity allocation to improve returns, but will discuss the matter further after September, officials said.

The CBT approved facial authentication technology for digital life certificates, authorized a new central payment system for retirees and proposed a detailed legal framework to minimize litigation, they said. The board also discussed ways to allow self-employed and non-unionized individuals to register with EPFO.

“The board agreed to raise the (investment) limit to increase earnings, but felt that now was not the right time to change equity exposure as the market is still sensitive to shocks. world,” said an official with knowledge of the matter. The matter will be discussed at the next meeting.

The PF organization is currently permitted to invest up to 15% of its additional equity contribution. Its Finance Audit and Investment Committee (FAIC) had approved the proposal to revise the limit to 20%, believing that higher exposure to equities could generate better returns.

EPFO announced 8.1% interest for FY22, the lowest since FY 1977-78, when it credited 8.0% interest. He had credited 8.5% in fiscal years 21 and 20.

Unions have opposed any investment in stock markets by EPFO ​​as these are not backed by government guarantees. They cited the crisis shortly after the pandemic took hold, when the stock return was negative 8.29%. EPFO began investing in stocks through exchange-traded funds (ETFs) in August 2015.

Face authentication will allow retirees to access the benefits from home. “CBT has approved facial authentication technology for digital life certificates,” Labor and Employment Minister Bhupendra Yadav said after the meeting. “From now on, pensioners will no longer have to go anywhere for their EPFO ​​pension.”

He added that the organization is working on expanding the convergence of the Employees State Insurance Corporation (ESIC) scheme with the Ayushman Bharat scheme to bring the unorganized sector into the social safety net and providing cashless medical facilities across the country. Currently, the Convergence Facility is limited to a few States.