EPFO defers decision to hike investments in ETFs to 15%

Retirement fund body EPFO's trustees today deferred the discussion on the proposal to increase investments in ETFs to 15 per cent, from the current 10 per cent of investible deposits, in 2017-18.

However, the Central Board of Trustees (CBT) agreed in principle to cover around 62 lakh volunteers of Anganwadi, Asha and mid-day meal workers under the social security scheme run by the Employees' Provident Fund Organisation (EPFO).

Besides, the trustees also decided to allow all banks including private ones to collect contributions from employers and make payments to employees in addition to SBI, nationalised banks and payGov platforms on a pilot basis.

On being asked about a decision to further enhance the equity investment cap of the provident fund money, Union Labour Minister Bandaru Dattatreya said the matter was not discussed at the CBT meet.

"The proposal was not discussed. We will discuss it in the next meeting to be held in 15-20 days," Dattatreya, who chaired the trustees' meeting, said.

The EPFO can invest 5 to 15 per cent of its investible deposits into equity or equity linked schemes as per its investment pattern.

However, the EPFO wanted to deliberate on the proposed move of raising its investments in ETF in the meeting of its apex decision making body CBT.

Taking cautious steps, the retirement fund body had decided to invest only 5 per cent of its investible deposits of around Rs 1 lakh crore every year into stock market in August 2015.

The body was so conscious that the trustees and government top brass on board of the CBT chose exchange trade funds for their venture into the stock market.

The EPFO has invested Rs 18,069 crore in the ETFs till February 18, 2017 and yielded a return of 18.13 per cent on these investments.

During the 216th special meeting of the CBT here, the body has decided to extend Employee Enrollment Campaign till June 30, 2017.

The campaign aims to enroll left out employees and provides incentives to employers in the form of waiver of administrative charges, nominal damages at Re 1 per annum and waiver of employees share if not deducted.

"The CBT took note of the extension of Employees' Enrollment Campaign (EEC) by the government for additional three months beginning April 1, 2017," the EPFO statement said.

In an important decision, the statement said the CBT recommended to the central government to consider issuing a notification for extending social security benefits to the volunteers of various schemes workers i.e. Anganwadi, ASHA, mid-day meal workers under the ambit of EPFO.

The board of trustees, it said, has also decided to allow banks to collect contributions from employers and make payments to employees in addition to SBI, nationalised banks and payGov platform through direct net banking services.