EPFO trustees to discuss investment in equity tomorrow

Retirement fund body EPFO's trustees will deliberate tomorrow on investing part of over Rs 6 lakh crore corpus in equities and relaxing norms for increasing exposure in housing finance firms.
In its meeting tomorrow, the Central Board of Trustees would deliberate on investment challenges in the changed economic scenario particularly in equity, according to the agenda of the meeting.
Recently, a section of EPFO had favoured investment in the equity of profit-making public sector blue chip companies.
However, some other unionists in the CBT are not in favour of investing in equity in view of volatility in the stock markets and also wants EPFO to further study on the proposal to increase exposure in housing finance firms.

"We will oppose investment in equity. Secondly we want EPFO to further study the proposal of increasing exposure in housing finance firm," All India Trade Union Congress Secretary and a CBT member D L Sachdev said.
"We would not succumb to pressure from the Prime Minister's Office to invest more in housing finance firms," he said.

The PMO has suggested that EPFO should deploy 15 per cent of its funds as loan for low-cost housing saying it would generate a credit flow of Rs 70,000 crore. The initiative is expected to create 3.5 lakh additional low cost homes.
The PMO's note further suggests that in case EPFO fails to invest 15 per cent of its funds in low cost housing then it should be forced to invest the shortfall into Rural Infrastructure Development Fund (RIDF) NABARD bonds in line with priority sector limit shortfall guidelines for Banks.

Echoing views, Bhartiya Mazdoor Sangh General Secretary Virjesh Upadhyay and an EPFO trustee said, "We are not in favour of equity investment. There is a need to further deliberate on increasing exposure in housing finance firms."
After relaxing norms to invest in AA+ rated bonds, GIC Housing, Canara Home Finance, ICICI Home Finance, Gruh Finance and Sundram Paribar would be eligile for parking EPFO funds.
In the present scenario, EPFO can invest in dual AAA rated bonds of companies. It has invested in HUDCO, HDFC, LIC Housing Finance, National Housing Bank, PNB Housing Finance, Dewan, Housing Finance Ltd and IndiaBulls Housing.

EPFO trustees will also consider a proposal to increase the limit for investment in private sector bonds from existing 10 per cent to 15 per cent of the corpus.
The trustees' will also discuss reducing maximum time for settlement of various claims and payment to beneficiaries under EPF, Pension and Employees' Deposit Linked Insurance scheme to 20 day from existing 30 days.
A proposal for implementation of minimum monthly pension of Rs 1,000 in perpetuity would also be discussed in the meeting. According to the notification issued on September 1, the entitlement is available till March 31.