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Can PF Investments Now Be Made In InvITs & REITs? What You Need To Know?
Updated: 06-12-2024 at 3:31 PM
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Provident Fund (PF) is one of the long-standing safe financial options most people opt for to secure their futures. The Employee Provident Fund Organisation (EPFO) supervises the provident fund in India and one of its main objectives is to revise and update related policies for the betterment of people. Recently, a major update has been announced regarding the investment of PFs.
Recently, the Central Board of Trustees (CBT) of the Employee Provident Fund Organisation decided and announced that from now on, people would be able to invest funds from their respective PFs in units of public sector-sponsored Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). This is an exceptional amendment introduced by the EPFO which would give people more choices regarding their provident funds, especially investing in InvITs and REITs as the infrastructure and real estate sector is growing exponentially.
What Is The New Update?
The Central Board of Trustees (CBT) of the Employee Provident Fund Organisation has declared that people with provident funds would now have the option and liberty of investing their funds in units of public sector-sponsored Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).
This would enhance the previously limited options that relied on the Exchange Traded Funds (ETFs). The allowance of investing 5 to 15% of funds through ETF was taken in 2015 followed by the formation of an interest account for ETF investment in Central Public Sector Enterprises (CPSEs). The investments in ETFs are working as per the BSE Sensex or NSE Nifty 50 Index and till March 2024, the investment amount totals up to Rs. 2.4 lakh crore.
Read More: How To Track Your EPF Claim Progress Easily?
What Are InvITs and REITs?
Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are ways through which one can invest in the infrastructure and real estate sectors. People can now invest in assets that generate income, specifically infrastructural projects and real estate projects which have proven themselves to be as profitable as one desires. The main difference between Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) is mentioned below:
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Infrastructure Investment Trusts: Through InvITs, people can invest in infrastructural projects like the construction of highways and earn a higher return.
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Real Estate Investment Trusts: Through REITs, people can invest in the real estate sector such as building commercial buildings, and earn a higher return thereafter.
Conclusion
The latest decision taken by the Central Board of Trustees (CBT) of the Employee Provident Fund Organisation would prove itself to be effective as it gives more options and the freedom to choose to the people with provident funds. Some changes are long awaited and this is one of them.
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