EPFO's investible corpus crosses Rs 21 trn in FY23, ETF investments at 9.2%

Rise comes on the back of increased subscriber base over the past few years

The total amount in the investment corpus of the Employees’ Provident Fund Organisation (EPFO) grew by 16.7 per cent in 2022-23 (FY23) to Rs 21.3 trillion from Rs 18.3 trillion in 2021-22 (FY22), according to the draft annual report of the retirement fund body accessed by Business Standard.

The total investible corpus under this social security organisation has nearly doubled in the past five years. In 2018-19, the total corpus was at Rs 11.1 trillion.

Of the total Rs 21.3 trillion, the Employee Provident Fund constitutes Rs 13.04 trillion, followed by the Employee Pension Fund (Rs 7.7 trillion) and Employees’ Deposit-Linked Insurance Scheme (Rs 41,062 crore).

EPFO invested most of its corpus during the financial year in state development loans (38.6 per cent), which are used by state governments to fund their fiscal deficits. This was followed by investments in central government securities (17.7 per cent), corporate bonds of public sector enterprises (15.5 per cent), and public accounts with the central government (10.1 per cent), according to data from the report.

The increase in the investible corpus of this social security organisation is due to an increased subscriber base over the past few years, which implies more income for the body and better returns. These returns can then be used to provide higher interest rates to its nearly 70 million subscribers.

However, an employee representative on the Central Board of Trustees of the EPFO mentioned that despite the increase in the total amount, there has been a slowdown in the pace of corpus growth in FY23. This may hinder the possibility of any rise in interest rates next year, potentially leading to stunted after-retirement savings for the subscribers.

“Due to the deterioration in employment quality and suppressed wages of a large workforce, people are left with subsistence or very low incomes. Officials have informed us of the contributions being very low. Hence, even though the number of subscribers is increasing, their contributions are minimal, which, in turn, affects the growth of the total corpus,” the representative added.

In FY22, the total amount under the corpus had grown by 26.6 per cent to Rs 18.3 trillion.

Additionally, the share of total investments (Rs 1.96 trillion) in exchange-traded funds (ETFs) also increased to 9.2 per cent from 8.7 per cent (Rs 1.6 trillion) in the previous year, thus closing the gap with the 15 per cent ceiling put in place.

EPFO had started investing 5 per cent of its corpus in ETFs based on the S&P BSE Sensex and National Stock Exchange Nifty50 in August 2015 to earn higher income on its investments and had subsequently raised the limit to 15 per cent.