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The Employees’ Provident Fund Organization (EPFO) is all set to reinvest all its redemption proceeds from exchange-traded funds (ETFs) in the stock market. Discussions have also started with the Finance Ministry for this. Let us tell you that the Central Board of Trustees, the highest decision-making body of EPFO, approved it in its meeting in the last week of March.
According to a report in the Economic Times, the EPFO has suggested measures that will help maximize equity returns despite market volatility. Officials said the proposal also includes calculating ETF returns on the average 5-year return of the Sensex over 4 years. After the approval of the Ministry of Finance and Labor on this, EPFO will take up the further process.
Let us tell you that EPFO invests the amount deposited in the PF account holder’s account in different ways. A part of the earnings through this investment is given as interest to the PF account holders. On behalf of EPFO, subscribers are paid 8.15% interest on the amount deposited in the PF account for the financial year 2022-23.
Allowance of investment up to 15%: As per Finance Ministry guidelines, EPFO can invest between 5% to 15% of its income in equity and related funds etc. However, EPFO is also seeking changes in ETF investment guidelines.
How much to invest in ETFs: Recently, the government informed the House that EPFO has invested Rs. 13,017 crore has been invested. EPFO has invested Rs. 53,081 crore, in FY 2021-22 Rs. 43,568 crore and in FY 2020-21 Rs. 32,071 crore had been invested. EPFO During the financial year 2019-20 in ETFs Rs. 31,501 crore and in FY 2018-19 Rs. 27,974 crore had been invested.