The Employees’ Provident Fund Organisation (EPFO) will invest Rs. 20,000 crore in exchange-traded funds this fiscal year as it has decided to raise the investment limit, Union Minister Bandaru Dattatreya said on Sunday. “Yesterday, the Employees Provident Fund Organisation Central Board of Trustees meeting held in Pune agreed on the proposal for raising ETF investments from 10 to 15 per cent of investible deposits. This year we are going to invest Rs. 20,000 crore in ETF,” the Union minister of state for labour and employment told reporters.
The Finance Ministry had earlier notified a new investment pattern for retirement fund body EPFO, allowing the provident fund body to invest a minimum of 5 per cent and up to 15 per cent of its funds in equity or equity-related schemes. EPFO started investing up to 5 per cent of the investible deposits in ETFs in August 2015. In the first year (2015-16), Rs. 6,577 crore was invested, while the figure for 2016-17 stood at Rs. 14,982 crore.
The return on investment in ETF was 13.72 per cent, Dattatreya said, adding that Rs. 234.86 crore was earned as dividend on the investment. “This is encouraging…seeing the returns the entire board also agreed to go ahead for 15 per cent. We are committed for more returns with safety of EPF funds,” the minister added. On the issue of raising the wage ceiling for coverage of employees under EPFO’s social security net from the existing Rs. 15,000 per month, Dattatreya said, “It is under examination.”
As of April 21 this year, an investment of Rs. 21,559 crore has been made and market value is Rs. 23,845 crore with absolute return of 10.6 per cent till March 31 while the absolute return as on April 21 is 11.5 per cent, the minister had said earlier this month.
Meanwhile, payments to EPFO beneficiaries will be made through electronic or digital fund transfers.
Provident fund body EPFO had earlier this month said: “Ministry of Labour & Employment…has provided for electronic or digital fund transfer/payment of EPF benefits, pension disbursement and insurance claim. For this purpose, suitable amendments have been made in all the three social security schemes administered by EPFO.”
Such move is likely to benefit 4.5 crores EPF subscribers and around than 54 lakh pensioners.