I left my job in December 2016 when I was 53 years old. Will I be continually earning interest on Employees’ Provident Fund (EPF) accrued till the age of 58 years (i.e 55 years retirement age plus three years grace period)? Is the interest accrued after December 2016 taxable?
EPF as an investment avenue is preferred due to the discipline it creates, assured rate of interest along with its tax-free status. Hence, even if it is a saving that is done more by force rather than choice, it is still considered attractive by investors. The PF account continues to earn interest till your retirement, irrespective of the fact that you are or not in an employment, making most investors continue with the same even if they have retired voluntarily. However, you should know that the interest earned in the PF account becomes taxable in case there is no fresh contribution to the account, i.e., once you have left active employment and there is no deposit to your account, the interest earned prospectively becomes taxable. Hence, in your case, the interest earned post December 2016 will be taxable.
I have been looking to invest in an international index fund. My goal is that the fund should have a small tracking error compared with its benchmark and a low fee structure. Which fund should I choose: index fund, ETF or fund of fund (FoF)? Please suggest a suitable fund.
If your goal is to invest in a fund having a low tracking error along with a low fee structure, then you should consider an ETF only. Out of the options listed, FoFs will have higher expenses than an ETF and, to a certain extent, index fund will also be more expensive. Once you have decided which country and index you want to invest in, you can take a pick from the specific global ETF having a low tracking error.
Surya Bhatia is managing partner of Asset Managers. Queries and views at firstname.lastname@example.org