EPF funds could be invested in equity: Govt

Labour Minister K Chandrashekar Rao today said the Employees' Provident Fund Organisation (EPFO) is considering investing a small portion of its assets in equities.

The EPFO will also restructure the investment pattern to include postal deposits and the national savings certificates.

This comes just days after the government allowed private provident funds, and pension and gratuity funds, to invest up to 5 per cent of their assets in blue-chip companies.

The finance and investment sub-committee under EPFO would be meeting shortly to discuss the feasibility of investing in equities, Rao said on the sidelines of Employees' State Insurance Corporation's board meeting. The EPFO is the country's biggest provident fund with about four crore subscribers.

"There was a need to restructure the investment pattern, and allowing EPFO to invest in postal deposits and NSC is being contemplated," said Rao

The proposal to invest EPFO funds in equities will also be discussed with its State Bank of India which manages the funds.

After the EPFO investment panel takes a decision, the matter will be taken up by the central board of trustees which will be meeting later this month to discuss the issue apart from deciding on the final interest rate on EPF to be paid to over four crore beneficiaries.The Board of Trustees had recommended an interim 8.5 per cent interest.

Asked if the ministry will support a higher rate, Rao said: "The Prime Minister, the finance minister and trade unions are seized of the matter and will decide accordingly."

He said returns on EPFO's investment were dropping and that the EPFO had to strike a balance between the rate of earning and rate of interest offered to workers.