Your retirement savings will soon be managed by private companies—some with foreign ownership.
The Employees Provident Fund Organisation (EPFO) on Tuesday opened the gates of provident fund money to three private fund managers. So far, State Bank of India had a monopoly on this. It is still in the game.
The EPFO move is welcome. And there are two important takeouts.
First, the government has finally taken a decision that was long overdue. That it has parted ways with the Left has helped. We hope it follows up with even more pension reforms.
Second, competition in the right to manage the Rs1.5 trillion or so with EPFO has drastically brought down the fees for managing provident funds. The four that have been selected have asked for 1 basis point, or one-hundredth of a percentage point, or less. That means they will manage our money for less than Rs15 crore. If only our mutual funds were managed so cheaply!