EPFO keeps a horizon of 15 years regarding equity investments: K K Jalan

As EPFO is a first time investor in equities, they are doubly careful by investing only in the ETFs

Central Provident Fund Commissioner K K Jalan today said the stock market volatility matters little to the Employees Provident Fund (EPF) as they are a long term investor looking at an investment horizon of not less than 15 years.

Following the Union Finance Ministry's decision to permit 5-15% of the Rs 8.5 lakh-crore EPF corpus in equities and around Rs 5000 crore to Rs 6,000 crore in the initial year, the EPF authorities have made a maiden investment of Rs 400 crore in August month.

"For a GDP growth rate of 7,5% Sensex grows at 8-8.5%. In the longer horizon we expect a 15-16% growth in fund value,"he said adding that long term growth equation will not be affected by the volatilities that are often seen in the equity markets.

As the EPFO is a first time investor in the equities they are doubly careful by investing only in the exchange traded funds (ETF) and out of this 75% in the National Stock Exchange (NSE) and 25% in the BSE ETFs, according to him.

Jalan addressed a press conference along with Union Minister of State for Labour and Employment Bhandaru Dattatreya soon after the meeting of Central Board of Trustees of EPF was over. At its meeting the CBT has taken a decision to constitute a committee for monitoring the equity participation and apprise the status to the CBT on a monthly basis.

He said they are hopeful of investing about Rs 4,000 crore-Rs 5000 crore in the ETFs by the end of March next year.

In a major decision the CBT has decided to enhance the Insurance benefits under the Employees Deposit Linked Insurance Scheme 1976 admissible to dependants of EPF members from the present maximum of Rs 3.6 lakhs to Rs 6 lakhs. Union Minister Dattatreya made this announcement at the press conference. The move will benefit 40 million EPF contributing members.

Meanwhile Jalan said they would soon take a decision on the Supreme Court's recent direction over taking action in non utilisation of building construction workers cess by the states. Out of Rs 20,000 crore collected so far only Rs 4,000 crore was used by the states, according to him. The action includes seizure of the fund and dissolution of the state level boards.