The common man deposits a part of his hard earned money in PF account by working day and night. So that after retirement in old age, his life can pass properly. He is sure that his money will be safe because it is taken care of by a government organization Employees Provident Fund Organization (EPFO). But now after this decision of EPFO, will your money really be safe?
EPFO has money deposited in the PF account of about 6 crore people of the country. EPFO earns interest on it by investing it in different places and then distributes it among its contributors. Some part of this is also invested by EPFO in the stock market. Although investing in the stock market is considered risky. Now EPFO is going to increase its investment in the stock market more than before.
Investment in stock will be increased
EPFO is considering increasing its investment in the stock market. Also, the money deposited through Exchange Traded Funds can be reinvested in equity and other options. According to media reports, EPFO will very soon seek clearance from the Finance Ministry in this regard, so that it can get maximum returns.
In this regard, the Central Board of Trustees of EPFO had passed in the last week of March itself. This is also mentioned in the minutes of the meeting held in March. According to the minutes, EPFO wants that the money made in ETF should now be invested in equity or other related options. By doing this, EPFO's direct investment in the stock market will increase and it will touch the 15 percent limit of investment in shares.
EPFO invests its funds according to the pattern of the Ministry of Finance. At present, EPFO can invest only 5 to 15 percent of its deposits increasing every year in equity through ETF. He has to invest the rest of the money in debt securities. There is no clear guideline on how to use the money coming after redeeming ETF.
Will the risk increase on your savings?
EPFO says that according to the data of January 2023, only 10 percent of the Employees Provident Fund has been invested in equity. While he is allowed to invest up to 15 percent of the fund in equity. EPFO started investing in equity through ETF from 2015-16.
As on March 31, 2022, EPFO has made a total investment of Rs 1,01,712.44 crore in ETFs. This is 9.24 percent of his total investment of Rs 11,00,953.55 crore.
However, EPFO is expected to maximize its returns from this. At the same time, many experts believe that this decision of EPFO has been taken at a time when there is a period of volatility in the stock market, and investing in such a volatile market can be risky. This is like putting people's hard earned money at risk.
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