An ETF, unlike regular mutual funds, trades like a common stock on a stock exchange.
You may get the entire interest of 8.50 per cent on your provident fund corpus this year, instead of two instalments of 8.15 per cent and 0.35 per cent as proposed by the Employees' Provident Fund Organisation (EPFO) earlier. The Union Labour Ministry has moved a proposal to the Finance Ministry for the transfer of entire consolidated amount of annual interest payments to Employees' Provident Fund Organisation (EPFO) subscribers in one go, sources in the retirement fund body told NDTV. Earlier, the Labour Ministry had decided to pay the sum in in two parts due to "exceptional circumstances arising out of COVID-19".
According to a senior official, the EPFO has received good returns from the sale of exchange-traded funds (ETFs) and is in now in a position to transfer the entire tranche of interest payments to subscribers in a single instance.
Earlier, the Central Board of Trustees — which is the top decision-making body of the EPFO — had decided to break the payment of interest to subscribers in two parts, due to the coronavirus outbreak.
The retirement fund body's plan to liquidate some of its investment in ETFs was delayed due to volatile market conditions triggered by the coronavirus pandemic.
Exchange-traded funds — unlike regular mutual funds — trade like shares listed on stock exchanges. The EPFO invests subscribers' money in a range of instruments including ETFs to provide promised returns which help the salaried build their retirement corpuses.
Managed by the Employees' Provident Fund Organisation (EPFO), EPF or Employees' Provident Fund is a pension scheme that enables employees to build a corpus for their retirement using a fixed portion of their salaries, with an equal contribution from their employers.
The rate of interest applicable to this scheme is reviewed by the government every year.
This year, retirement fund body EPFO decided to pay interest at the rate of 8.50 per cent for the current financial year, marking a cut of 15 basis points (0.15 percentage point) from the previous year