The Employees’ Provident Fund Organisation (EPFO) is preparing for a major overhaul in the way it invests money.
The retirement fund body plans to merge the funds of its different schemes into one common investment pool.
The main goal is simple: make investments more transparent, more efficient, and easier to manage — especially when putting money into Exchange Traded Funds (ETFs).
Right now, EPFO follows different investment cycles for different schemes.
This makes the process complex. With the new system, managing billions of rupees could become smoother and more accurate.
One Common Pool for All Major Schemes
At present, EPFO manages separate funds for its key schemes, including EPF, EPS, and EDLI.
Under the new proposal, these schemes will share a single investment pool.
This change will allow EPFO to invest larger amounts in the stock market through ETFs more easily.
It will also help the organisation comply with SEBI rules that apply to direct transactions above ₹25 crore.
Another expected benefit is lower transaction costs, which could improve overall efficiency.
In short, one large pool may work better than several smaller ones.
Shift From Monthly to Annual Investment Plan
EPFO currently follows a monthly investment cycle — from the 20th of one month to the 19th of the next.
Now, there is a proposal to replace this with an annual investment plan.
This shift could give fund managers more flexibility.
Instead of making decisions based on just one month’s data, they will be able to study market trends throughout the year.
That means better handling of market ups and downs — and possibly stronger long-term returns for subscribers.
New Rules and Performance-Based Incentives
EPFO is also working on a new Standard Operating Procedure (SOP) for investments.
Under the proposed system, strict timelines will be set for fund managers to help them respond quickly to market movements.
There are also reports that performance-linked incentives may be introduced.
Fund managers who generate higher returns could receive better rewards.
The full proposal will be discussed in the upcoming Central Board of Trustees (CBT) meeting, where a final decision is expected.
If approved, these changes could mark one of the biggest reforms in EPFO’s investment strategy in recent years.
