Employees Provident Fund Organization (EPFO) has approved the proposal to add exchange traded funds ETF units to PF accounts. This will benefit about five crore account holders.
News – (November 2017)
Status of ETF units
By the end of March next year, all the account holders will also see the status of ETF units in the EPFO account. The decision was taken at the meeting of Central Board of Trustees (CBT) on Thursday.
EPFO – CBT
CBT is the crucial committee of EPFO. Its president is the Union Labor Minister. After the meeting, Labor Minister Santosh Gangwar told that the CBT has approved the new accounting policy for the assessment of investment in equities.
The recommendations of the Comptroller and Auditor General (CAG) have also been included in this policy. Labor Secretary M Satywati said that whenever the account holder will withdraw advance from the EPF account or close the account, EPFO will liquidate ETF units.
He clarified that even after adding ETF units to the PF account, it will remain separate from the demat. Even after joining ETF units in this account, the account holder will not be able to trade here.
EPFO Will Liquidate ETF Units
In addition, EPFO will liquidate ETF units only if the account holder will apply for withdrawal. EPFO started investing in ETFs in August 2015.
“When a subscriber wants to withdraw his savings from PF, he can opt for either cash or equity,” said M Sathiavathy, secretary of Labour and Employment ministry. She also said that whenever a member takes advance or settle their PF accounts, By EPFO his/her ETF units would be liquidated.
According to the Labor Secretary, ‘EPFO has so far invested around Rs 32,000 crore in ETFs. So far 21.87 percent returns have been received. However, this return is only approximate.
EPFO will get this return only when this investment will be redeemed. Labor Minister Gangwar told that in the meeting, the National Payments Corporation of India (NPCI) has also approved the proposal for centralized payment arrangements for EPFO.
This will allow the participants to pay easily and at low cost. Apart from this, due to being connected to the base, the payment will be made faster in this arrangement.
“The process has been smoothened, subscribers do not have to do anything, the subscriber will get two component in his account, I am happy that finally, workers whose money has been invested will get the benefit of it,” Vrijesh Upadhyay, general secretary of Bharatiya Mazdoor Sangh said this, CBT member.