EPFO defers decision to hike equity investment cap from 15% to 20%

The board agreed in principle to the idea of higher equity allocation to improve returns, but will discuss the issue further after September, officials said.

The CBT approved face authentication technology for digital life certificates, cleared a new central payment system for pensioners, and proposed a detailed legal framework to minimise litigation, they said. The board also discussed ways to allow selfemployed and unorganised people to enroll with the EPFO.

“The board agreed on hiking the (investment) limit to increase profit, but it felt this is not the right time to tweak the equity exposure as the market is still susceptible to global shocks,” said an official with knowledge of the matter. The issue will be taken up at the next meeting.

The PF organisation is currently allowed to invest up to 15% of its incremental inflow in equity. Its Finance Audit and Investment Committee (FAIC) had approved the proposal to revise the limit to 20%, reasoning that higher exposure to stocks may yield better returns.

The EPFO has announced 8.1% interest for FY22, the lowest since fiscal year 1977-78, when it had credited 8.0% interest. It had credited 8.5% in FY21 and FY20.

Trade unions have been opposing any investment in stock markets by the EPFO as these are not backed by government guarantees. They cited the slump soon after the pandemic took hold, when the return from equity was a negative 8.29%. The EPFO started investing in equities through exchange-traded funds (ETFs) in August 2015.

Face authentication will allow pensioners to avail benefits from home. “The CBT has approved face authentication technology for digital life certificates,” labour and employment minister Bhupendra Yadav said after the meeting. “Now pensioners will not be required to go anywhere for their EPFO pension.”

He added that the organisation is working on expanding the convergence of the Employees’ State Insurance Corporation (ESIC) scheme with the Ayushman Bharat scheme to bring the unorganised sector into the social security net and provide cashless medical facilities across the country. Currently, the convergence facility is limited to a few states.