EPFO May Double ETF Investment to 10%

NEW DELHI: EPFO May Double ETF Investment 10 The friction between Retirement fund body EPFO and trade unions may potentially escalate as EPFO might double the proportion of its investment in exchange-traded funds (ETFs) to 10% this fiscal. Hence, in order to make it a meaningful contribution to the overall portfolio return of the EPFO, a panel set up by the Employee Provident Fund Organisation’s (EPFO’s) finance audit and investment committee (FAIC) suggested to double the proportion of its investment in ETFs.

A decision to this effect could be taken at the EPFO’s central board of trustees (CBT) meeting on 26th June 2016, an official reportedly said.

Till now, despite the opposition from labour unions, the EPFO had so far invested 5% of investible deposits in ETFs. On June 30, the amount invested by the EPFO in ETFs was Rs 7,468 crore. So far the absolute return on the investment is 7.45%.

“As per the agenda, the labour ministry will update us on the EPFO’s investment in equity as well as the place before us the report of the expert group.

However, unions will continue to oppose any such investment,” said DL Sachdev, who is also a member of CBT, of All India Trade Union Congress (AITUC).

It was pointed out by an expert panel that at present the Employee Provident Fund Organisation’s equity investment constitute less than 1% of the total corpus compared with the global average of about 30%. Earlier, it was indicated by the labour minister Bandaru Dattatreya that the proportion of EPFO’s equity investment would increase.

CBT may also discuss the relative powers of the central government and board of trustees of the EPFO as mentioned in the EPF&MP Act and the EPF Scheme framed there under, besides the enhanced limit of investment in equity.

A discussion was called by all members of the CBT on the issue of powers of the CBT and its members as it has a bearing on matters placed for before it for consideration. As per their point of view, the Board, within its statutory powers is competent to make decisions and only such decisions require a reference to the government, which the Act and Schemes so specify.

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