Stock Market Slide: A Warning for Retirement Savings Managers
The stock market slide is a warning to managers of retirement savings that investing in stocks is no shortcut to decent returns. Its investment in stocks had brought the Employees' Provident Fund (EPF) much higher rates of return compared to investments in government and private debt, whetting an appetite for ever-larger allocation of funds to stocks, currently capped at 15%. However, with the equities market on the slide'Sensex closed 561 points lower on Tuesday'the EPFO reportedly wants to play it safe and park more money in safe harbor government bonds. Scurrying to safety is not an ideal response.
A large corpus of over Rs 10 lakh crore allows the EPF to diversify its portfolio beyond traded stocks and bonds. It should consider private equity and real estate as well. The same applies to the National Pension System (NPS), open to civil servants who joined service from January 2004, and now to voluntary subscribers.
The real debate should be on whether EPF and NPS should undertake more diverse investments.
From India, Varanasi
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The stock market slide is a warning to managers of retirement savings that investing in stocks is no shortcut to decent returns. Its investment in stocks had brought the Employees' Provident Fund (EPF) much higher rates of return compared to investments in government and private debt, whetting an appetite for ever-larger allocation of funds to stocks, currently capped at 15%. However, with the equities market on the slide'Sensex closed 561 points lower on Tuesday'the EPFO reportedly wants to play it safe and park more money in safe harbor government bonds. Scurrying to safety is not an ideal response.
A large corpus of over Rs 10 lakh crore allows the EPF to diversify its portfolio beyond traded stocks and bonds. It should consider private equity and real estate as well. The same applies to the National Pension System (NPS), open to civil servants who joined service from January 2004, and now to voluntary subscribers.
The real debate should be on whether EPF and NPS should undertake more diverse investments.
From India, Varanasi
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