EPFO members will get equity investment benefit from March 2018

Employee’s Provident Fund Organization decided to give benefits of equity investment to its members by crediting units of ETF to provident fund account. EPFO members will able to see units of ETF in their account by March 2018. In this post, let us see process how EPFO members will get equity investment benefit from March.

 Employees Provident Fund Equity Investment

EPFO has been investing in stock market since August 2015 through ETFs. But, it was not clear how it would pass on gains or losses of ETF investment to members. Finally, government has agreed on mechanism on how to disburse benefit of return from investing in equity to provident fund subscribers.

Under this policy, EPFO will keep cash and equity component for subscriber and 15 per cent invested every month in equity will be allotted to subscribers in form of units. And dividend earned by EPFO on its equity investment will be distributed among subscribers.

Equity investment exit

When you want to withdraw your saving from PF you can opt for either cash or equity. Whenever you took an advance or settled your PF account then units will be liquidated by EPFO. So number of exchange traded fund units will receive in your account will depend on market price.

For example, out of 1000, if 150 is equity part and price of single unit is 15 then you will get three units. You do not have to do anything but each will get two units in your account. As of now EPFO has invested over Rs 32,298 crore in ETFs. Also read How to open a PPF account? Know its rules and benefits.

Payment transfer through NCPI platform

EPFO’s board has approved proposal for centralized payment system using National Payments Corporation of India (NCPI) platform, which would not only reduce transaction charges but also bring more convenience. Read EPF advance, partial withdrawal rules you need to know.

This new system would enable EPFO to transfer funds on same day through NCPI platform to beneficiaries. At present, EPFO makes payments in decentralized mode involve higher cost of transaction. But, delays in re-credit in case of transaction failed and does not provide for Aadhaar permit payments. Also read how to check EPF balance, passbook, and statement online.

Two sections of accounts

EPFO organization invests in equities through exchange traded funds (ETF). Here ETF invest in debt funds and stocks together. Apart from this stocks reflect composition of index. It can either be Nifty or Sensex on stock exchange. Read more To Know How to Add Employee Missing Details in Unified PF Portal. See EPFO may invest 18, 000 crore in stocks: EPFO news

Now, accounts of members will have two portions debt money and units from ETF. These units can be liquidated by member at time of withdrawal. In 2015, EPFO decide to invest in exchange-traded funds or equity. It has allotted 15 per cent of its investments made during 2017-18 to ETFs.

Employee’s Provident Fund Organization made gains through equity investment will now reflected as units in your accounts who can liquidate them at time of withdrawal. Check How to solve Aadhaar Authentication Error in Unified EPF Portal?