This is nothing but a pleasant surprise for EPFO subscribers. The Employees Provident Fund Organisation's new move is likely to benefit over 5 crore subscribers as the retirement fund body will provide an option to increase or decrease investments of their provident fund in stocks through exchange trade funds (ETF) in the current fiscal itself. The EPFO is reportedly planning to credit ETF investments in the PF accounts in about three months. The retirement body, thereafter, would give an option to the subscribers to hike or cut investments in ETFs from their funds.
EPFO's Central Provident Fund Commissioner V P Joy said, "We have to develop a software to credit ETFs into the PF accounts of subscribers. It will take 2 to 3 months." He added, "Once we do that, we would go for next phase to give an option to members to increase or decrease investments in the stocks." Last week, the Central Board of Trustees (CBT) had decided to explore the possibility of giving an option to subscribers to enhance equity allocation beyond mandated equity investment limit, presently 15%, as also of reducing it below that limit.
It may be noted that the retirement fund body invests 15 per cent of its investible deposits into the ETFs. The CBT had in 2017 approved an accounting policy to credit ETFs into the members account apart from cash component.
The CBT had also approved the recommendation of EPFO's advisory body, Finance Investment and Audit Committee (FIAC), that subscribers be allocated equity units only for 15 per cent of their contributions.
All units over and above this allocation to all the subscribers would be held by the EPFO.
The EPFO, which has invested Rs 41,967.51 crore in ETFs with return of 17.23 per cent as of February 28, 2018, had sold ETFs worth Rs 2,500 crore in March this year for the first time to liquidate its investments in stock market.
The EPFO reportedly started investing in ETFs from August 2015, and in the year 2015-16 it invested 5 per cent of its investible deposits which was subsequently increased to 10 per cent in 2016-17, and 15 per cent in 2017-18.
(With PTI inputs)