EPFO to study stock market investment alternative

NEW DELHI: The labour ministry has asked the Employees’ Provident Fund Organisation (EPFO) to study various investment options, including the finance ministry’s proposal to invest a portion of its funds into the stock market that has repeatedly met with opposition from EPFO’s board members. “I have asked EPFO to study various investment options in great details, including the option of investing in equity.

We hope to firm up our view on the same over the next few days,” labour minister Bandaru Dattatreya said after meeting EPFO officials on Friday. The central board of trustees, headed by the labour minister, is scheduled to meet on December 19 to deliberate on the challenges related to investment pattern of EPFO. The other issues that will come up for discussion include amendments to the Employees’ Pension Scheme 1995 and the comprehensive amendment of the EPF & MP Act 1952.

The finance ministry has been pitching for EPFO funds to be invested in the equity markets to maximise their yields. However, following strong opposition from unions in view of the volatile nature of stocks, EPFO has so far refrained from investing in stock market. Pension funds across the world have invested 52% of their corpus in equity, with the US at 57%, followed by Australia (54%), UK (50%) and Japan (40%), as per a study by Towers Watson.