EPFO Board approves reinvestment norms for ETF redemption, amnesty scheme for employers

The changes in investment norms is being done with an aim to earn better returns through investment in equity. The investment committee of the EPFO had earlier noted that “there is a need to balance the short-term returns on investments under EPF Scheme with the future growth prospects in equity”.

As per the notified pattern of investment by the Ministry of Labour and Employment, the EPFO can invest up to 15 per cent of its incremental flows in equity. EPFO started with an investment of 5 per cent in equity through ETFs on Sensex or Nifty in August 2015. Subsequently from 2017 the investment in ETFs was increased to 15 per cent of the fresh accretion.

The 44-member CBT, headed by Labour and Employment Minister Mansukh Mandaviya and having both employees’ and employers’ representatives, also gave nod for the EPFO Amnesty Scheme 2024. The scheme is being brought as the Labour and Employment Ministry moves ahead with the implementation plan for the Budget announcement of Employment Linked Incentive (ELI) scheme.

“The initiative is designed to encourage employers to voluntarily disclose and rectify past non-compliance or under-compliance without facing penalties or legal repercussions. A simple online declaration from employers will be sufficient to avail the scheme benefits,” the Ministry said in a statement. The amnesty scheme has been proposed in the backdrop that several small establishments, especially Micro, Small and Medium Enterprises (MSMEs), may opt for the ELI scheme but would have faced a roadblock if there were past dues of non-compliance for EPF contribution.

The CBT also approved a key feature of crediting interest at the time of claim settlements. At present, for the claim settled till 24th of the month, interest is paid only up to the end of the previous month. Now, the interest will be paid to the member up to the date of settlement.
The Board also discussed the earlier decision to increase the limit for auto claims settlement facility to Rs 1 lakh from Rs 50,000 which is now applicable for advances for housing, marriage and education. In the current financial year 2024-25, the EPFO has settled 1.15 crore claims in auto mode.

“During the Financial Year 2023-24, the EPFO settled 4.45 crore claims for an amount of Rs 1.82 lakh crore. In the current FY, 3.83 crore claims have already been settled for more than Rs.1.57 lakh crore,” the Ministry said.