Update on EPFO: On July 29 and 30, 2022, the EPFO Board will meet. At this meeting, the proposal to raise the present limit of investment in the stock market and similar items from 15% to 20% can be approved.
The EPFO will invest more in equity, which will make PF account holders very happy. The EPF Board has decreased the EPF rate from 8.5% to 8.10% for the fiscal year 2021–2022, which has drawn harsh criticism. EPF is currently preparing to provide its investors more profits. Actually, the EPFO board has the authority to decide to raise the stock market investment cap.
Board may make decisions
It is important to note that the EPFO board will convene on July 29 and 30, 2022, at which the request to raise the current limit of investment in the stock market and similar products from 15% to 20% can be accepted. Investors will receive greater returns than those from stock market investments if the EPF board decides to adopt this course of action.
Government may publish
Rameshwar Teli, the minister of state for labor and employment, responded in writing to a query in the Lok Sabha with the statement, “The FIAC, a subcommittee of the CBT, has suggested lifting the equity and equity related investment limit from 5-15 percent to 5-20 percent.” Let us point out that trade unions have been opposed to the EPFO’s increased stock market investment limits. According to the government, there is no government guarantee on this investment, which could result in losses for investors.
Possible equity investments of up to 20%
Significantly, the proposal to raise the cap on stock market investments to 20% was accepted by EPFO’s Finance Investment and Audit Committee. Only 5 to 15% of the EPFO’s funds are currently invested through exchange-traded funds (ETFs). In reality, EPFO received a return on equity investment of 16.27 percent in 2021–2022 compared to 14.67 percent in 2020–2021. EPFO has made a 15-year investment in nuclear power bonds, on which a yearly interest payment of 6.89 percent will be made. Bonds issued by the Central Government and State Governments are currently subject to interest rates ranging from 7.27 percent to 7.57 percent. It is clear that EPFO is receiving low returns on its investments in business and government bonds.
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