EPFO: Central Board Of Trustees To Decide On Increasing ETF Investment To 15%, Other Proposals

The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) is set to meet on November 30, 2024 to discuss various proposals, including a redemption policy for increased investments in exchange-traded funds (ETFs), re-investment of ETF proceeds, guidelines for investments into real estate investment trusts (REITs), and the annual performance portfolio of EPFO managers, as chaired by Union Labour and Employment Minister Mansukh Mandaviya. 

Re-Investing ETF Redemption In Equities And Assets 

Apparently, the EPFO is considering reinvesting some of the redemption profits from ETFs into stock and other assets to increase returns. 

 
Investment in ETFs commenced in FY26, with an initial exposure of 5 per cent of additional deposits, which has since grown to 10 per cent. According to plans, this will be increased to 15 per cent. As of March 31, 2024, the EPFO invested 9.5 per cent (₹2.35 lakh crore) of its investible capital in ETFs. 
 

However, according to officials, such factors are not being discussed. “This is the hard-earned money of employees. We need to keep it from becoming too volatile. While equities markets are now performing well, this may not always be the case,” PTI quoted an official as saying. 

Investment In REITs And InVITs 

Further, the CBT will propose rules to invest EFPO in real estate investment trusts (Reits) or Securities and Exchange Board of India (Sebi)-regulated infrastructure investment trusts (InVITs). 

Annual Performance And Annual Report 

Apparently, a review of portfolio managers’ yearly performance is scheduled, as well as approval of the draft annual report for FY24. The EPFO will also discuss the progress of implementing the Supreme Court’s decision on enhanced pensions. 

Increase In EPS Contribution 

According to the PTI report, the Labour Ministry is considering a redesign of the Employees’ Pension Scheme 1995 (EPS-95) to allow participants to contribute more for larger retirement benefits. 
 

At present, EPFO members can contribute 12 per cent of their basic wage to the Employees’ Provident Fund (EPF) account. According to the PTI report, members would receive higher pensions if they contribute more to their EPS-95 account, and this option is also being evaluated.