also approved a plan to create a reserve fund for its equity investments to shield the subscribers from stock market
Besides, the EPFO’s Central Board of Trustees (CBT), chaired by Labour and Employment Minister Santosh Kumar Gangwar, met on Friday and approved changes to the accounting policy of investment
The CBT also approved the recommendation of the finance investment
and audit committee, the EPFO’s advisory body, which suggested that the subscribers be allocated equity units only for 15 per cent of their contributions and all units over and above this allocation would be held by the EPFO, a statement issued by the EPFO
“A separate reserve fund for smoothening out volatility of equity returns and to provide equitable returns to all the subscribers needs to be created,” a statement issued by the EPFO
Central Provident Fund Commissioner V P Joy said a committee had been formed to decide the modalities of creating a reserve fund for equity investments. The EPFO
invests up to 15 per cent of the subscribers’ incremental deposits in ETFs. The EPFO
has been investing in ETFs since August 2015 and has invested around Rs 420 billion in the equity instrument so far, giving a return of 17 per cent till February 28 this year.
The EPFO’s decision follows a suggestion by the finance ministry
to create a reserve fund for its investments in various instruments such as equity and bonds. For the past few years, the finance ministry
has been asking the EPFO
to create a reserve fund and offer lower interest rates to ensure it does not suffer losses due to market volatility.
(With inputs from PTI)