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- Where is Your EPF Money Invested?
Where is Your EPF Money Invested?
In India, for years now, Employee Provident Fund (EPF) has remained an employee’s primary, secure, and compulsory form of investment. But even after years, majority of the crowd does not know how this investment works.
EPF is a government-established savings scheme for salaried employees. EPF is managed by the EPF organisation (EPFO). It is a statutory body established under the Employee’s Provident Fund Act, 1956.
EPFO pays high interest to its investors. EPFO earns by investing in securities. EPFO cannot make haphazard investments. It has a set of rules defined regarding investments.
As per rules, out of the total accruals in a year, EPFO can invest 85% in debt securities, and the remaining 15% can be invested in stocks.
Out of the total investments in debt securities, EPFO has to invest 45% to 65% in government securities and 20% to 50% in listed securities. It can also invest up to 5% in short-term debt or related investments having a minimum rating of A1+ by 2 rating agencies registered by the markets regulator.
For equity investments, EPFO can invest in registered mutual funds and exchange-traded funds (ETF) that move in tandem with the market.
It can also invest directly in listed companies with a market capitalisation of not less than Rs 500 bn as of the date of investments, and REITs regulated by the market regulator.
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