EPFO’s equity investment benefits from April
The government has decided on how to disburse the benefit of the higher return from investing in equity to provident fund subscribers. It will take effect from the coming financial year. The Central Board of Trustees of the Employees PF Organisation (EPFO) on Thursday approved a policy whereby the body plans to monetise its stock exposure to benefit subscribers.
| In 2015-16, it invested 5% of the annual incremental corpus in equities; in 2016-17, 10% | The money invested in equity since 2015-16 is ~32,500 crore and the return has been healthy at an annual 21.8% invested every month in equity would be allotted to subscribers in the form of units. The dividend earned by EPFO on its equity investment would also be distributed among the subscribers.
“When a subscriber wants to withdraw his savings from the PF, he can opt for either cash or equity,” said M Sathiavathy, secretary of the labour and employment ministry. Whenever a subscribers took an advance or settled their PF account, the units would be liquidated by EPFO.
The number of exchange traded fund units a subscriber will receive in his or her account will depend on the market price. For instance, out of ~1,000, if ~150 is the equity component and the price of a single unit is ~50, the subscriber will get three units.
“The process has been smoothened. Subscribers do not have to do anything but each will get two components in his account. I am happy that finally workers whose money has been invested will get the benefit of it,” said Vrijesh Upadhyay, general secretary of the Bharatiya Mazdoor Sangh, a CBT member.
The money invested in equity since 2015-16 is ~32,500 crore and the return has been healthy at an annual 21.8 per cent. EPFO functions under the Union labour ministry and started investing in stocks in August 2015. In 2015-16, it invested five per cent of the annual incremental corpus in equities; in 201617, 10 per cent. The annual incremental corpus is ~1.2 lakh crore and 15 per cent of that will be at least ~18,000 crore.