FinMin looks at allowing EPFO to invest 30% in equity market

 The Finance Ministry has proposed allowing retirement and gratuity funds to invest up to 30 per cent of their money in the equity market, a suggestion that's likely to be opposed by labour unions. 

According to the proposals, non-government provident, pension and gratuity funds can invest up to 15 per cent in shares of companies that have derivatives or in mutual funds.As much as 15 per cent can be invested in exchange traded funds, index funds that replicate the portfolios of the Sensex or Nifty, or derivatives including credit default swaps. The funds will be permitted to invest up to 40 per cent in government securities.
 As per existing norms, such funds cannot take any direct equity exposure. With regard to debt instruments such as government bonds, the current exposure limit is 55 per cent of the total funds.

Retirement fund body EPFO is allowed to invest up to 5 per cent in money market instruments, including equity linked schemes of mutual funds regulated by the Securities and Exchange Board of India. However, worker groups including the Bharatiya Mazdoor Sangh (BMS) and the All India Trade Union Congress have decided to oppose any move to allow the Employees’ Provident Fund Organisation (EPFO) to invest part of the over Rs 5 lakh crore it holds in the equity market.

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