India’s retirement fund manager, the Employees Provident Fund Organization (EPFO), is expected to retain 8.65 percent interest rate on provident fund (PF) deposits for its nearly 5 crore members for 2017-18. Earlier this month, the EPFO has already sold a portion of its investments in the exchange traded funds (ETF) worth Rs 2,886 crore to maintain 8.65 percent interest for this fiscal.
The EPFO had provided 8.65 percent rate of interest on PF deposits for 2016-17, a tad lower than 8.8 percent in 2015- 16. It has earned a return of around 16 percent at Rs 1,054 crore on sale of ETFs, which would be sufficient to provide 8.65 per cent rate of interest this fiscal. The EPFO started investing in ETFs since August 2015 and it has so far not monetised the ETF investments. It has invested around Rs 44,000 crore in the ETFs till date.
EPFO at its trustees’ meet proposed to decide on the proposal for rate of interest on the EPF deposits for the current fiscal. Besides, the trustees may also review the proposal to credit the ETFs into the members' EPF account because a large number of members do not have that level of financial literacy. It is proposed that the members should be given option to have ETF credits in their EPF account.