During the period from 2015-16, EPFO began investing in equity via exchange-traded funds based on the NSE 50 and BSE 30 indices.
The subscribers of personnel provident fund (EPF) will have fantastic news to hear even in a falling interest price situation. The Central Board of Trustees, EPF, has encouraged 8.50% annual price of interest to be credited on EPF accumulations in members’ accounts for the monetary year 2020-21. This was decided at the 228th meeting of the Central Board held in Srinagar, Jammu & Kashmir today below the chairmanship of Santosh Kumar Gangwar, Union Minister of State for Labour & Employment (Independent Charge), Vice-Chairmanship of Apurva Chandra, Secretary (L&E) and the Member Secretary Sunil Barthwal, Central P F Commissioner. The interest price would be officially notified in the government gazette following which EPFO would credit the price of interest into the subscribers’ accounts.
Since FY 2014 EPFO has regularly generated returns not much less than 8.50 %. A higher EPF interest price along with compounding tends to make a considerable distinction to gains of subscribers. This is in spite of the reality that EPFO has regularly followed a conservative strategy towards investment, placing the highest emphasis on the security and preservation of the principal. Risk appetite of EPFO is incredibly low, because it entails investing widespread man’s retirement savings also.
EPFO more than the years has been capable to distribute larger revenue to its members, via many financial cycles with minimal credit threat. Considering the higher credit profile of the EPFO investment, the interest price of EPFO is significantly larger than other comparable investment avenues out there for subscribers.
During the period from 2015-16 EPFO prudently began investing in equity via exchange-traded funds based on the NSE 50 and BSE 30 indices. The investment in equity assets began from 5 % for FY 2015 and subsequently gone up to 15 % of the incremental portfolio.
For FY 2021, EPFO decided to liquidate investment in equities and the interest price encouraged is a outcome of combined revenue from interest received from debt investment as properly as revenue realized from equity investment. This has enabled EPFO to provide a larger return to its subscribers and nonetheless permitting EPFO with a healthier surplus to act as a cushion for giving a larger return in the future also. There is no more than-drawl on the EPFO corpus due to this revenue distribution.
The assured fixed return strategy of EPFO, announced by CBT each year along with the tax exemptions tends to make it an appealing selection for investors, giving them with robust social safety in the kind of provident fund, pension, and insurance coverage schemes.