Up to 25% of a salaried individual’s contribution to the employees’ provident fund (EPF) may go into equities if a plan being considered by the country’s retirement fund manager bears fruit, sources said. Currently, the Employees Provident Fund Organisation (EPFO) invests 15% of contributions in equities and the rest in debt.
Sources said EPFO is considering allowing employees with higher salaries to route 25% of their PF contribution into stocks, while retaining the 15% cap for low-income employees. If the proposal takes effect, this will be a departure from the EPFO’s one-size-fits-all policy for investing retirement savings of millions of subscribers.
The rethink comes as provident fund subscribers are seeking better returns even as returns from debt investments remain low. The move, if its goes through, will also help EPFO take on competition from the National Pension System, which allows subscribers to invest up to 50% of their savings in equities.