EPFO to invest up to Rs20,000 cr in ETFs this fiscal

The Employees Provident Fund Organisation (EPFO), the apex body of provident funds in the country, at its meeting on Saturday decided to raise investment limit in exchange-traded funds to15 per cent, thereby raising its planned investment in ETFs to Rs20,000 crore in the current financial year even as the retirement fund body decided not to limit contribution to provident funds to 10 per cent.

This is in line with the investment pattern prescribed by the finance ministry, which allows EPFO to invest a minimum of 5 per cent and up to 15 per cent of its investible funds in equity or equity-related schemes.

''The Employees Provident Fund Organisation (EPFO) 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 Rs20,000 crore in ETF,'' union minister of state for labour and employment Bandaru Dattatraya told reporters in Pune on Sunday.

The EPFO had started investing up to 5 per cent of its investible deposits in ETFs in August 2015. In the first year 2015-16, the fund invested Rs6,577 crore in EPF and raised it to Rs14,982 crore in 2016-17.

The return on investment in ETF was 13.72 per cent, Dattatreya said, adding 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,'' said Dattatreya. On the issue of raising the wage ceiling for coverage of employees under the EPFO's social security net from the existing Rs15,000 per month, Dattatreya said, ''It is under examination.''

The Central Board of Trustees (CBT) of EPFO, however, turned down a proposal to reduce the mandatory contributions from workers and employers to 10 per cent.

At present, employees and employers contribute 12 per cent of basic wages each towards Employees Provident Fund Scheme (EPF), Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI).

The proposal to reduce the contributions by employers and employees to 10 per cent of basic wages, including basic pay and dearness allowance, was listed on the agenda for meeting.

"The employer, employees and the government representatives expressed their reservations about it as they felt it should be continued at 12 per cent.

"It is their view and it has been recorded... Now we will see... Government will take a view on it," labour secretary M Sathiyavathy said.