EPFO's investible corpus more than doubled in 5 years to Rs 24.75 trillion

The total amount in the investment corpus of the Employees’ Provident Fund Organisation (EPFO) more than doubled in the past five years to Rs 24.75 trillion in the financial year 2023-2024 (FY24) from Rs 11.1 trillion in FY19, according to the annual report of the social security organisation reviewed by Business Standard.

 

In FY24, the total investible corpus under this social security organisation grew by 15.8 per cent from Rs 21.36 trillion in the preceding financial year.

 

Meanwhile, the number of active contributing subscribers grew by 7.6 per cent to 73.7 million in FY24 from 68.5 million in FY23.

 

Of the total investible corpus, the Employee Provident Fund constitutes Rs 15.29 trillion, followed by the Employee Pension Fund (Rs 8.76 trillion) and Employees’ Deposit-Linked Insurance Scheme (Rs 45,528 crore).

 

Data shows that EPFO invested most of its corpus during FY24 in state development loans (40.7 per cent), which are used by state governments to fund their fiscal deficits. This was followed by investments in central government securities (16.3 per cent), corporate bonds of public sector enterprises (15.9 per cent), and public accounts with the central government (9.8 per cent).

 

The increase in the investible corpus implies more income for the retirement fund body and better returns. These returns can then be used to provide higher interest rates to its nearly 325 million members which includes both contributing and non-contributing members. 

 

However, an employee representative on the Central Board of Trustees (CBT) - which is the apex decision making body of the EPFO, mentioned that despite the increase in the total amount, there has been a slowdown in the pace of corpus growth in FY24. This may hinder the possibility of any rise in interest rate to be announced in February, potentially leading to stunted after-retirement savings for the members.

 

“The yield of the state development loans has not been satisfactory this year and the majority of the money is invested in them. It was discussed in the [Board] meeting last week to divert some money to other instruments like equity and central government bonds for earning higher income. Also, suppressed wages have left people with very paltry income which then affects their contributions. Hence, even though the number of subscribers is increasing, their contributions are low which in turn affects the growth of the total corpus,” the representative added.

 

Previously in FY23, the investible corpus had grown by 16.7 per cent to Rs 21.36 trillion. Similarly, in FY22, the investible corpus had grown by 26.6 per cent to Rs 18.3 trillion.

 

Besides, data also showed that the share of total investments in equities via the Exchange Traded Funds (ETFs) had increased to 9.5 per cent (Rs 2.34 trillion) in FY24 from 9.2 per cent (Rs 1.96 trillion) in the previous fiscal, thus closing the gap with the 15 per cent ceiling put in place.

 

EPFO had started investing 5 per cent of its corpus in ETFs based on the S&P BSE Sensex and National Stock Exchange Nifty50 in August 2015 to earn higher income on its investments and had subsequently raised the permissible limit to 15 per cent.