EPFO may review investing in equities

A negative return on investments in equity market has made the Employment Provident Fund Organization (EPFO) worried.

The Central Board of Trustees (CBT) members demanded review of investment policy in the meeting of the apex body held on Tuesday. The EPFO has agreed to consider the matter.

 The EPFO has been investing 5% of incremental deposits in market related schemes since August, 2015. It has earned negative return of 9.54%. The value of Rs 5,920 crore has come down to Rs 5,355 crore at the end of February. The loss of over Rs 500 crore has sent shock waves among the pension fund managers.

The EPFO has taken the approval of the Finance Ministry for investing a minimum of 5% and a maximum of 15% in Exchange Traded Equities.

Trade unions’ representatives in the Central Board of Trustees have been opposing investments in private equities on the ground that it would expose the pension fund to vitality of markets. “We were opposed to it from the beginning. The money of workers is not meant for insecure investments,” AITUC leader D L Sachdeva told Deccan Herald.

The CBT has decided to enhance proportion of incremental investments of the EPFO in government securities from 50% to 65%. The Finance Ministry has given approval for this.

The Labour Ministry says that limit of 50% has been enhanced because there were good offers for investments but it was not possible without Finance Ministry’s approval.