EPFO to credit exchange traded fund ( ETF ) units to provident fund accounts

Employees’ Provident Fund Organisation ( EPFO ) today revealed that the proposal to credit exchange traded fund ( ETF ) units to provident fund accounts has been approved. See this News Article

EPFO Credit exchange traded fund ETF
There are approximately 4 .5 crore members in the EPFO presently. Nevertheless, account holders will see them incorporated in their PF accounts by March-end in the coming year. 

EPFO’s Central Provident Fund Commissioner revealed that the retirement fund body will start crediting ETF units to the subscribers’ accounts by March-end this fiscal. Labour Secretary M Sathiyavathy said, “When subscribers take advance or settle their PF accounts, the ETF units would be liquidated by EPFO”. 

The major difference between a demat account and PF account is that once the ETF units are credited to a subscribers account, then the subscriber will NOT be able to do any trading. Also, EPFO will liquidate ETF units only when members make an application for withdrawals. Basically, a subscriber will submit their application for withdrawals similarly to what they do now and EPFO will liquidate the ETF units.

Sathiyavathy said, “EPFO has invested around Rs 32,000 crore so far in the ETFs. The return on investment so far is 21 .87 percent. But this is notional return because the EPFO will get this return only after it would liquidate this investment.” In my view, this is a very good return on investment and beats any fixed income scheme in the market.

On their part, EPFO said that this will help subscribers by lowering the transaction charges and bring more convenience to subscribers, the board also approved a proposal for centralised payment system for EPFO using National Payments Corporation of India ( NPCI ) platform. The benefits that subscribers will get is that it will allow transfer of EPFO funds on the same day through the NPCI platform. This will have the facility of Aadhaar-enabled transfer of funds as well.

Also, see here –  How to check your PF Balance via missed call and other means?

Posted in Pension, Provident Fund, Retirement.