To facilitate flow of EPFO funds into equity markets, Labour Ministry is proposing to start with investment of 1 per cent of its corpus into equity and related schemes and take it gradually to 5 per cent.
The investment pattern for the retirement fund body in this regard is likely to be notified soon by the Labour Ministry, a senior government official said today.
Finance Minister Arun Jaitley in the budget proposed a new investment pattern under which the EPFO would invest a minimum of 5 per cent of its investable funds into equity and equity related schemes.
"We will notify the investment pattern soon. Over a period of time, it makes sense to invest in equity. Investment in a basket of portfolio is safe. All over the world, experience is that equity investment has given the highest returns, the Labour Ministry official said.
"What we are thinking is that we will start with 1 per cent and will go up to 5 per cent. We will review and gradually increase the investment limit," the official said.
The official was talking to reporters on the sidelines of a meeting of Central Board Of Trustees (CBT), Employees' Provident Fund Organisation (EPFO) and Tripartite Consultation on Comprehensive Amendments to the Employees' Provident Funds & Miscellaneous Provisions Act, 1952.
Trade unions have opposed any move to invest EPFO fund in capital market, CITU president A K Padmanabhan said.
As per the mandate given by Finance Ministry, investment in equity and related instruments could be up to 15 per cent of total funds.
Labour Minister Bandaru Dattatreya said based on today's views and apprehensions, the ministry will discuss with appropriate authorities to dispel the apprehensions expressed by stakeholders.
During the meeting, EPFO Central Provident Fund Commissioner K K Jalan said the central government can decide the pattern of investment of fund.
"Central government is 100 per cent competent as regards the investment guidelines of any provident fund in the country. The pattern of investment is to be determined by the government. We are not putting 100 per cent of the money in equity.
"At the first, 1 per cent and then review, then 2 per cent and review and try to reach 5 per cent. We are going very-very gradually. The feeling is that the economy will go better. So we can consider our investment in ETF (exchange traded funds) or economy," Jalan said.
