Will your PF be invested in stocks?

In a bid to earn higher return for its 40 million subscribers, the country's biggest provident fund EPFO is exploring the possibility of investing a small portion of its assets in equities.

"There is a finance and investment sub-committee under Employees Provident Fund Organisation, which will discuss it," Labour Minister K Chandrashekhar Rao said on the sidelines of ESIC board meeting in New Delhi on Tuesday.

The investment panel will meet this month to discuss the feasibility of investing a portion of EPFO funds in equities.

The proposal to invest EPF money in equities would also be discussed with its banker, the State Bank of India.

The move comes days after the government allowed private provident funds, superannuation and gratuity funds to invest up to 5 per cent of their assets in equity of blue-chip companies.

After the EPFO investment panel takes a decision, the matter will be taken up by the Central Board of Trustees, which is also slated to meet in February to discuss the issue apart from deciding on the final interest rate on EPF to be paid to over 40 million beneficiaries.

The CBT had recommended an interim 8.5 per cent interest on EPF at its last meeting.

Asked if the labour ministry will support a higher rate, Rao said, "The prime minister, finance minister and trade unions are seized of the matter and will decide accordingly."

He declined to elaborate but said: "The decision will always be in the interest of the workers."

Admitting that the return on EPFO's investment was going down and EPFO had to strike a balance between the rate of earning and rate of interest offered to workers, he said: "There was a need to restructure the investment pattern and allowing the EPF to invest in postal deposits and National Savings Certificate is being contemplated."