One in every ten rupees parked in your provident fund would now be invested on Dalal Street, with the government deciding to double employees’ PF savings’ exposure to equities from the present level of 5 per cent to 10 per cent of fresh accretions to the corpus, Union Labour and Employment Minister Bandaru Dattatreya said.
Riding over concerns expressed by employee representatives on the board of the Employees’ Provident Fund Organisation (EPFO), the Labour Ministry has issued instructions to its fund managers to tap the enhanced window for equity investments immediately. Officials said this is expected to translate into an additional investment of Rs.11,500 crore in stocks over the next six months of this financial year.
“This will meet a long-standing demand of EPF members… EPFO is a social security organisation and a custodian of workers’ money, so it is our responsibility to keep the money safe and at the same time, give them good returns,” Mr. Dattatreya said.
While the Finance Ministry had allowed equity investments between 5 per cent and 15 per cent of fresh accretions for non-government provident funds such as EPFO, the PF office had made a cautious start by allowing 5 per cent investments last August after years of resistance to a stock market foray. The Finance Ministry had first allowed equity investments of up to 5 per cent of corpus in 2005.
The proposal to hike the exposure to equities was discussed with the EPFO’s central board of trustees twice in recent months and the improvements in returns were shared with them, the minister said. “We have taken this decision after careful consideration. The world over, pension funds invest around 30 per cent in equities,” Mr Dattatreya said.
