Sebi wants young workers in mutual funds
While looking to give a boost to the mutual fund sector with some contribution from about Rs 5.5 lakh crore corpus being managed by EPFO (Employee Provident Fund Organisation), Sebi feels that age restrictions would safeguard investors from "unnecessary risks" during years closer to their retirement.
At the same time, income-related restrictions would also help keep the low-income employees away from the potential risks associated with capital markets, which has been a major roadblock in pension money being invested in high-risk assets.
Under the new long-term mutual fund policy being finalised by Sebi, the regulator will soon ask the government to pave way for a part of EPFO corpus being invested in MF schemes. The policy has been approved by the Sebi board and would soon be notified.
Finance Ministry had permitted EPFO way back in 2008 to invest up to 15 per cent of its corpus in shares or equity linked schemes of mutual funds. However, due to probable risk aversion on part of the trustees of EPFO, investment in equity-oriented mutual funds is not being made currently.
Further, Labour Ministry last year superseded an earlier decision and specifically stated that no investment is allowed in equity and equity-focussed MF schemes.
Sebi has now suggested change in this Labour Ministry