Your employer deducts the amount for the employee provident fund (EPF) from your salary, and these funds are ultimately transferred to the Employees Provident Fund Organisation (EPFO). This amount earns guaranteed interest and keeps accumulating until you reach superannuation. But where exactly is this money invested to ensure a guaranteed interest? Is it solely placed in debt instruments?

In a written reply in the Lok Sabha on December 2, 2024, the Minister of State for Labour and Employment, Shobha Karandlaje, stated, “Investment of funds is made as per the Pattern of Investment notified by the Department of Financial Services, Ministry of Finance, Government of India vide Notification number 11/14/2013-PR dated 2nd March 2015 as amended from time to time and guidelines issued by CBT, EPF from time to time”.

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Investment In Stocks:

She also clarified that there are no direct investments of the EPF corpus in equities, neither listed nor in any unlisted stocks. However, investments in exchange-traded funds (ETFs) are permitted under specific guidelines, and thus, some part of the EPFO investments are invested in it.

“EPFO has investment in both Debt Securities and Exchange Traded Funds as per prescribed pattern. As per approval of the 207th meeting of the Central Board of Trustees, EPF held on 31.03.2015, EPFO has started investment in Exchange Traded Funds from August 2015 onwards”, she said.

Debt Investment And ETFs:

As of March 31, 2024, the total corpus of the various funds managed by EPFO reached Rs 24.75 lakh crore, with Rs 22.41 lakh crore allocated to debt instruments and Rs 2.34 lakh crore in ETFs.

Notably, EPFO’s investment in ETFs has risen over the years, from Rs 22,765.99 crore in 2017-18 to Rs 57,184.24 crore in 2023-24. For the current financial year, it has already reached Rs 34,207.93 crore as of October 2024.

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Here is a summary of EPFO's ETF investments over the last seven financial years:

Financial Year                                         Investment in ETFs

2017-18                                                        Rs 22,765.99 crore

2018-19                                                        Rs 27,974.25 crore

2019-20                                                        Rs 31,501.11 crore

2020-21                                                        Rs 32,070.84 crore

2021-22                                                        Rs 43,568.08 crore

2022-23                                                        Rs 53,081.26 crore

2023-24                                                        Rs 57,184.24 crore

2024-25 (up to October 2024)           Rs 34,207.93 crore.

Source: Shobha Karandlaje reply in Lok Sabha

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EPFO announces interest rates once a year, and accordingly, the interest is calculated and credited to every account. As the reply stated, the organisation does not invest in individual stocks but invests through ETFs, that track broader indices like the BSE-Sensex and NSE Nifty-50 index. Additionally, it sometimes invests in thematic ETFs such as Bharat 33 ETF and Central Public Sector Enterprises (CPSE) ETFs, which track specific indices like Bharat 22 and CPSE indices.