Source | https://economictimes.indiatimes.com
NEW DELHI: A greater proportion of provident fund savings could be headed for the stock market with shares rising to successive records in past weeks, said a government official.
Such a move could more than double the provident fund money invested in exchange-traded funds (ETFs) over time.
The government is considering a plan to raise the equity investment limit for the Employees’ Provident Fund Organisation (EPFO) to 25% from 15%.
The move follows the higher than-expected return on equity while that on debt has been falling, compelling the government to explore wider investment options to maximise returns.
The return on equity exceeds 13.5% while that on debt is 8.5%. That compares with the EPFO payout for FY17 pegged at 8.65%.
The move could lift EPFO’s annual equity allocation to as much as Rs 50,000 crore over time, if the proposal is accepted.