EPFO Proposes Up to 3% of Fresh Accretions in Startup and AIF Funds

EPFO is working on guidelines that would let it put up to 3% of its fresh annual accretions into Sebi-regulated category I and category II alternative investment funds, including startup funds. The Times of India reported that the proposal was discussed at an investment committee meeting last Thursday and will go to the central board of trustees in November.

EPFO's 3% AIF Allocation Proposal

The retirement savings body, a statutory organisation under the Ministry of Labour & Employment that runs provident fund, pension and insurance schemes for organised-sector workers, has not yet invested in category I or category II AIFs. The Times of India reported that the Department for Promotion of Industry and Internal Trade wrote to EPFO in September seeking its participation in the Startup India Fund of Funds 2.0, which provided the context for examining a broader approach to AIF investments.

Under the plan, worker capital would initially be channelled through institutional investors such as the National Investment and Infrastructure Fund and SIDBI's Startup India Fund of Funds 2.0. CNBC TV18 reported on October 27 that the government had finalised 15 alternative investment funds under the Startup India Fund of Funds 2.0 scheme, with ₹270 crore earmarked for SIDBI; the scheme has a ₹10,000 crore corpus and targets deep tech, manufacturing and early-stage startups.

The proposal marks a shift from debt instruments towards risk capital. The finance ministry's investment pattern allows EPFO to place up to 5% of fresh accretions in asset-backed and trust-structured investments. The draft includes a mandatory minimum AIF corpus of Rs 100 crore, single-fund exposure caps, a prohibition on foreign-incorporated investments and a requirement that fund managers remain independent of promoters.

EPFO's Scale and Digital Operations

According to akta.pro company records, EPFO administers retirement savings for approximately 34 crore organised-sector members through a centralised digital platform managing a Rs 28.4 trillion corpus. The same records put contributing EPF members at over 8 crore and pensioners served through the digital platform at over 8.1 million. EPFO was founded in 1952 and is headquartered in New Delhi.

Earlier EPFO Decisions This Month

EPFO's Central Board of Trustees is scheduled to meet on November 19 in Gujarat, where it is likely to discuss raising the minimum monthly pension under the Employees' Pension Scheme from ₹1,000, with unions demanding ₹7,500, Business Standard reported. EPFO also urged eligible establishments to apply for its PF trust amnesty scheme before the December 28, 2026 deadline, according to CNBC TV18. On October 11, India.com reported that EPFO reminded employers to file the September 2026 ECR and deposit dues by October 15, 2026.

November Trustees Meeting on the Proposal

The central board of trustees, led by Labour Minister Mansukh Mandaviya, will take up the AIF proposal at its November meeting.