Because the Employees’ Provident Fund Organization (EPFO) is getting ready to change its investment strategy for this, you may receive more interest on your Employees Provident Fund (EPF) account in the near future. To increase shareholder interest, emphasis is set to be placed on investment in Exchange-Traded Funds (ETFs). In order to increase profits, EPFO will adjust its investing approach.

According to people with knowledge of the situation, the EPFO is developing a plan to gradually reduce the high returns received from equity funds. According to experts, EPFO will have more capital available each year with this new investment plan, allowing it to pay higher interest to shareholders.

Running Current Policy

EPFO now has a “first in, first out” equity redemption policy. In this, the initial investment is withdrawn after the fourth year. Its goal is to generate positive returns on the money invested over the long term. The investment goal, however, may not always be achieved when the returns decline at the predetermined time due to a market decline.

The New Strategy Of EPFO Is

The Finance Investment and Audit Committee has recommended setting a cap of 10% return for earnings in equity investments made through Exchange Traded Funds (ETFs), under the proposed system. Returns on equity are higher than those on debt. There is also a plan to withdraw from it every day. Sources with knowledge of the situation claim that this will boost returns and bring clarity to the investment withdrawal plan (redeem policy).

• EPFO ​​will redeem ETFs only if the annualized returns are 10% or more.
• There will be daily 10 withdrawals if you get a higher than 10% return on ETF
• 1% interest will be available on EPF in the current financial year
• EPFO also plans to increase the investment period in ETFs to five years instead of four.

The Difficulty Of The National Pension System’s High Returns (NPS).

Over the past 12 years, NPS has provided an average return of more than 10%. The Home-Pension Fund Regulatory and Development Authority PFRDA, which regulates pension funds, has changed a number of the NPS investment guidelines. Along with doing away with the minimum deposit requirement, this also allows for any time deposits into NPS accounts.