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, Employees
Provident Fund Organisation (EPFO), Dr K.K. Jalan said at an ASSOCHAM
event.
According to the Finance ministry's norms Employee Provident Fund Organistaion (EPFO) can invest upto 15% but the Central Board of Trustees (CBT) allows only upto 5% to start with, said Dr Jalan while inaugurating the ‘National Conference on Provident Fund in Equity Market,' organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“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 very less because it is only 5% of the incremental market and therefore, you see the overall market it will less than 1% of our corpus”, said Dr Jalan at the ASSOCHAM meeting.
Employees' Provident Fund Organisation (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.
Dr. Jalan further said that “All the union representatives have also agreed on this capping and it is under government consideration. We are hoping that decision will come soon.
“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”, said Dr. Jalan.
We are not here to pop-up the equity market… We want to see our investments gross therefore that extent our decision takers will take those steps so that investment of EPFO in the equity market gives better return.
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, added Dr. Jalan.
Till the equity begin to rise in last one and half years, we were not worse at all in 5 years if we see the growth. We are going with our fears and our expectations and we assure you that we are going in, said CPFC chairman.
He also mentioned that there are number of people who are getting three pensions at a time for disability, old age and also might be EPFO pension. He said, we don't have data regarding that therefore, now the country requires a data on the pensioner side also.
He 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, said Dr. Jalan.
He also mentioned about the financial literacy in the country. He said, less than 5% of the people who are financial literate and we need to work it on the financial literacy that will only tell the people as to how we should invest.
EPFO is preparing itself atleast all these things for the future and we assure that we will continue to serve the pensioners or our stakeholders in a better way. Pension Fund is being asked to invest in equity but at the same time we will have to deepen up financial sector itself. Therefore, we need to deepen our market and need to create the financial instruments so that pension fund also able to take the decision, added Dr. Jalan.
Mr. Rana Kapoor, MD & CEO, YES BANK, President, ASSOCHAM said, “ASSOCHAM welcomes the Union Labour Ministry's progressive decision to permit up to 15% incremental investment of Provident Funds in equity and related instruments. 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.
This Conference comes at a most opportune time when India, under the visionary leadership of Hon'ble Prime Minister Narendra Modi, is entering the next phase of growth which will require innovative avenues of investment in key sectors, thereby fast-tracking India on a 10% GDP growth path.”
According to the Finance ministry's norms Employee Provident Fund Organistaion (EPFO) can invest upto 15% but the Central Board of Trustees (CBT) allows only upto 5% to start with, said Dr Jalan while inaugurating the ‘National Conference on Provident Fund in Equity Market,' organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“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 very less because it is only 5% of the incremental market and therefore, you see the overall market it will less than 1% of our corpus”, said Dr Jalan at the ASSOCHAM meeting.
Employees' Provident Fund Organisation (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.
Dr. Jalan further said that “All the union representatives have also agreed on this capping and it is under government consideration. We are hoping that decision will come soon.
“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”, said Dr. Jalan.
We are not here to pop-up the equity market… We want to see our investments gross therefore that extent our decision takers will take those steps so that investment of EPFO in the equity market gives better return.
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, added Dr. Jalan.
Till the equity begin to rise in last one and half years, we were not worse at all in 5 years if we see the growth. We are going with our fears and our expectations and we assure you that we are going in, said CPFC chairman.
He also mentioned that there are number of people who are getting three pensions at a time for disability, old age and also might be EPFO pension. He said, we don't have data regarding that therefore, now the country requires a data on the pensioner side also.
He 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, said Dr. Jalan.
He also mentioned about the financial literacy in the country. He said, less than 5% of the people who are financial literate and we need to work it on the financial literacy that will only tell the people as to how we should invest.
EPFO is preparing itself atleast all these things for the future and we assure that we will continue to serve the pensioners or our stakeholders in a better way. Pension Fund is being asked to invest in equity but at the same time we will have to deepen up financial sector itself. Therefore, we need to deepen our market and need to create the financial instruments so that pension fund also able to take the decision, added Dr. Jalan.
Mr. Rana Kapoor, MD & CEO, YES BANK, President, ASSOCHAM said, “ASSOCHAM welcomes the Union Labour Ministry's progressive decision to permit up to 15% incremental investment of Provident Funds in equity and related instruments. 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.
This Conference comes at a most opportune time when India, under the visionary leadership of Hon'ble Prime Minister Narendra Modi, is entering the next phase of growth which will require innovative avenues of investment in key sectors, thereby fast-tracking India on a 10% GDP growth path.”
