(MENAFN- KNN India) Employees Provident Fund Organisation (EPFO) will be entering the capital market on August 6 to participate in equity through ETFs and the decision of exact amount to be invested will be taken soon, Central Provident Fund Commissioner, EPFO, KK Jalan said.
According to the Finance ministry's norms EPFO can invest upto 15 per cent but the Central Board of Trustees (CBT) allows only upto 5 per cent to start with, he said while inaugurating the 'National Conference on Provident Fund in Equity Market,' organised by the ASSOCHAM on Friday.
"We are a long term players and in long term usually the equity market behaves in a positive manner. There has always given a positive return but naturally that risk element of equity going down is always there and that risk element is very less because it is only 5 per cent of the incremental market and therefore, you see the overall market it will less than 1 per cent of our corpus", he said.
EPFO has sent the proposal to the labour ministry on capping premature PF withdrawal at 75 per cent of the total deposit and the rest 25 per cent would be paid to the subscriber at the age of 58 years. Currently, EPFO subscribers can withdraw the entire amount prematurely by showing not employed anywhere for two months.
Jalan further said that all the union representatives have also agreed on this capping and it is under government consideration.
"EPFO eventually will have to come with 3-4 models and we will also have to give options to our stakeholders. We have taken initiatives and we will come to that stage in a year or two and can give options to people", he said.
He added most of the pension funds invest in equity and that's why we decided to invest in equity and we feel that our decision over the years will be a good thing for our stakeholders.
Jalan also pointed out there is no pension fund study in this country.
"EPFO and PFRDA definitely do not know the purpose of its fund. We need to seriously see the corpus of the pension fund and types of the pension fund in the country," he said.
Welcoming the Union Labour Ministry's progressive decision to permit up to 15 per cent incremental investment of Provident Funds in equity and related instruments, President, ASSOCHAM, Rana Kapoor said this strategic initiative will propel India's capital markets, particularly through ETFs or index funds, and significantly increase return on investments in the longer term.
Redirecting these funds towards Senior Citizen Welfare Fund, BPL card holders, small and marginal farmers, amongst others, will play a leading role in achieving inclusive socio-economic growth for all Indian citizens, he said.
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