Investment upto 5% of EPFO corpus in stock markets allowed

News

• Labour ministry has notified the new investment pattern for the Employee Provident Fund Organisation (EPFO).
• The new pattern allows the retirement fund body to invest 5% of its incremental income in Exchange Traded Funds (ETFs) from the current financial year.
• The limit of investment in ETFs, starting from 1% with effect from April 1 and reaching 5% by the end of the year, is the lower end of the range recommended by the finance ministry that had proposed 5-15% in equities.
• This will mean the EPFO will now invest 5% of its estimated incremental income of Rs 1.5 lakh crore in exchange-traded funds, an indirect and passive investment in equity to begin with.

Benefit

• It is a move that could see over Rs 7500 crore of retirement savings of workers going into the capital markets for the first time.