Sunil Jain: Golden glow

PERSPECTIVES

Of the 45-odd crore workers in the country, less than a handful have any sort of pension plans. Till now, it was believed the Employees Pension Fund Organisation (EPFO) had 4.01 crore members. This, however, may not be true, and based on its last all-India survey, IIMS Dataworks estimates the actual EPFO membership is probably a fourth of this, at 1.02 crore. Indeed, based on the annual inflows in the EPFO and the 4.01 crore figure, the annual salary of workers would be just Rs 19,667.

This, however, is way below the average income of Rs 70,000 for these workers who, typically, work for larger firms, according to the IIMS survey. More interestingly, the IIMS survey shows EPFO members appear to be a lot more open to investing in equity than the non-EPFO population — 41 per cent don’t find investing in the market, directly or indirectly, risky as compared to 24 per cent for non-EPFO individuals. 16 per cent of the EPFO group have invested in equity versus 3 per cent for the non-EPFO lot. And the government and the EPFO Board still want to restrict the EPFO’s investment in equity. Here’s another reason to quickly allow private players in and give EPFO members the freedom to opt for private players and choose their own investment baskets as well.
 

Higher Risk Profile (EPFO members have a greater appetite for risk in comparison with non-EPFO members)
	General Population	EPFO members
A) % saying such investment is not risky
Gold	64	73
House/real estate	85	91
Central Govt bonds	49	58
Mutual funds	14	26
Stock market (equity shares)	10	15
B) And investing in stocks, directly and indirectly (per cent in the group)
Have a bank account	44	82
Have postal savings	12	14
Have a life insurance plan	32	62
Have invested in mutual funds	2	11
Have invested in securities	1	5
Have small savings	9	5
Totals don’t add up to 100 as several people may have invested in more than one financial instrumentSource: Invest Invest Economic Foundation, IIMS Dataworks