EPFO trustees defer decision on equity market, low-cost housing

The Employees Provident Fund Organisation (EPFO) has deferred a decision on investment of its funds in equity market and low-cost housing.

The decision was taken in EPFO’s top decision making body, Central Board of Trustees' 125th meeting held on Friday.

According to sources, the trustees have decided to send the issues of equity investment to its Finance Investment and Audit Committee (FIAO).

Sources said the EPFO may also likely form a select committee which will have a few members from the CBT to look into investment in low-cost housing.

EPFO has been skeptical about investment in the equity market because it is volatile in nature, sources said.

These decisions were taken under the chairmanship of the new labour minister Bandaru Dattatreya who took charge after the Cabinet reshuffle in November this year.

The trade unions have opposed the move on investment in equity market and low cost housing.

The finance ministry in June had suggested a revised investment pattern wherein it had mooted investing up to 15 per cent in direct equity.

Following this, the EPFO had formed a four-member committee to prepare a report based on the government’s suggestions.

The FIAO of EPFO had also given a few recommendations to the earlier CBT in August, suggesting a few more options for EPFO’s investments including equity, infrastructure and real estate related products to beat inflation.

According to the committee, EPFO’s Rs 100 investment in 2005 became Rs 193 in 2013 at EPFO’s rate of interest in nominal terms. However, “because of inflation, its value is reduced to only Rs 97.” It observed that the EPFO is not “responding to periodic advantages.” However, the CBT had deferred presentation by the committee this in its last meeting.

The proposal of devolving funds in housing sector had come from the Prime Minister’s Office (PMO) which has proposed EPFO and insurance firms to deploy 15 per cent of its total funds towards loans for low-cost housing which is expected to build 3,50,000 additional homes.