New Delhi, November 23, 2017
In a major decision taken today by the retirement fund body Employees’ Provident Fund Organisation (EPFO) today it was announced that the proposal to credit exchange traded fund (ETF) units to provident fund accounts has been cleared.
There are as many as 4.5 crore members in the EPFO currently. However, account holders will be able to see them reflected in their PF accounts by March-end next year.
This change was effected in EPFO after consulting IIM Bangalore and will alter accounting policy for valuation and accounting of equity investments, Labour Minister Santosh Gangwar said in New Delhi. The decision was earlier cleared by the apex decision making body Central Board of Trustee (CBT) and this accounting policy change also incorporated observations of the Comptroller and Auditor General (CAG). EPFO began investing its funds in exchange traded funds s in August, 2015.
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.
“When subscribers take advance or settle their PF accounts, the ETF units would be liquidated by EPFO,” Labour Secretary M Sathiyavathy said.
The difference between demat account and PF account was explained by Sathiyavathy too. She said after crediting ETF units, the subscriber cannot do trading in this case. Also, EPFO would liquidate ETF units only when members apply for withdrawals.
Sathiyavathy said, “EPFO has invested around Rs 32,000 crore so far in the ETFs. The return on investment so far is 21.87 per cent. But this is notional because the EPFO would get this return only when it would liquidate this investment.”
On his part, Gangwar revealed that to help subscribers by reducing transaction charges and bring more convenience, the board also approved a proposal for centralised payment system for EPFO using National Payments Corporation of India (NPCI) platform.
The benefits that accrue to subscribers would include, the enabling of transfer of EPFO funds on same day through the NPCI platform. Moreover, EPFO may reconcile the transaction status on T+0 basis (day of transaction plus zero days). This will have the facility of Aadhaar-enabled transfer of funds, he added.
Regarding grievances of subscribers, minister said he and other EPFO officials would hold the hearing on December 15, 2017.
[The Financial Express]