The government let the Employees Provident Fund Organisation (EPFO) put money into investment funds (AIFs) five years ago. Now the provident fund body is making rules about how it can invest in AIFs and startups according to a report, in the Times of India (ToI).
A proposal was discussed in the investment committee meeting on Thursday, October 22 2026 to allocate up to 3% of the EPFO’s annual accretions into Securities and Exchange Board of India-regulated Category I and Category II AIFs according to a TOI report. Earlier in September the EPFO received a letter from the Department for Promotion of Industry and Internal Trade requesting participation, in the formed Startup India Fund of Funds 2.0.
EPFO may invest through NIIF and SIDBI
In the phase the EPFO is looking at putting investments through well-known institutions, like the National Investment and Infrastructure Fund or NIIF and SIDBI’s Startup India Fund of Funds 2.0 according to the report.
The proposal is expected to be discussed by the Central Board of Trustees (CBT) which is chaired by Labour Minister Mansukh Mandaviya, in November according to the report.
If approved this change would let the EPFO spread some of its investments, beyond the debt tools and look at chances that might give better returns over many years. Yet putting money into AIFs also comes with market risks.
How much money can the EPFO invest in AIFs?
According to the investment pattern announced by the Finance Ministry the EPFO is allowed to invest up to 5% of its annual accretions, in asset-backed and trust-structured investments.
The news report also says that the retirement fund body has not yet put any money into SEBI-regulated Category I and Category II AIFs.
The EPFO manages about Rs 30 lakh crore in retirement savings for almost 30 crore members.
The proposed allocation of, up to 3 percent of annual accretions would stay inside the larger 5 percent investment limit as long as the rules apply and final approval is given TOI said.
What are Category I and Category II AIFs?
Category I AIFs are development-oriented funds. Category I AIFs help sectors that provide economic benefits, such, as startups, small and medium enterprises, infrastructure projects, social ventures and venture capital.
Category II AIFs are private equity funds, real estate funds and private debt funds that are not Category I or Category III and Category II AIFs do not use leverage or borrowing.
The report states that a strict risk protection mechanism should guard workers money against investment policy. It requires a minimum corpus of Rs 100 crore in an AIF. The risk protection plan also limits exposure to a fund. It bars incorporation. The risk protection policy demands that fund managers remain independent, from their promoters.
One thought on “EPFO’s Big Move! Will Your PF Money Be Invested in Startups and AIFs?”