EQUITY INVESTMENT CAP IN PFs MAY EXPAND

The Union Budget for 2018-19 is likely to announce a hike in investment limits for all non-government provident funds,

superannuation, and gratuity funds in stock market-related instruments to at least 25 per cent from 15 per cent of its incremental corpus at present, sources said. The move may benefit subscribers of schemes under provident fund trusts managed by private firms. SOMESH JHA writes

The Union Budget for 2018-19 may likely announce a hike in investment limits for all non-government provident funds, superannuation, and gratuity funds in stock market-related instruments to at least 25 per cent from 15 per cent of its incremental corpus at present, sources said.

The move may benefit subscribers of schemes under Employees’ Provident Fund Organisation (EPFO), Pension Fund Regulatory and Development Authority, and provident fund trusts managed by private firms. According to sources, the likely announcement in the Union Budget to increase equity investments by provident fund bodies prompted the EPFO to postpone the meeting of its finance investment and audit committee (FIAC) that was slated to be held on Wednesday.

“The FIAC was supposed to meet on Wednesday. However, there are likely chances that the finance minister may announce a hike in equity investments prescribed for provident fund bodies from 15 per cent at present. The meeting has been postponed and will be now held after the presentation of the Union Budget,” said an FIAC member.

The FIAC is headed by EPFO’s Central Provident Fund Commissioner V P Joy.

At present, all non-government provident funds, superannuation, and gratuity funds are required to invest 5-15 per cent of its yearly corpus in equity and equity-related instruments such as exchange-traded funds and exchange-traded derivatives.