EPFO defers key decisions on investment options
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Last Updated: Saturday, December 05, 2009, 18:16
New Delhi: Retirement fund manger EPFO's apex decision making body Central Board of Trustees (CBT) on Saturday deferred a decision on investing 3-5 percent of its Rs 2.57 lakh crore corpus in stock indices.

The Board also postponed till next meeting a decision on increasing the minimum wage limit to Rs 15,000 per month for mandatory deduction in provident fund by employers. At present, the cap is set at Rs 6,500 a month.

"We have not scheduled the next meeting of the CBT. But surely in the next two or three months, we would meet again to take up remaining issues," Labour Minister Mallikarjun Kharge, who also heads the CBT, told reporters after the meeting.

Trustees also put off a decision on the issue of allowing EPFO to purchase government-backed bonds with maturity period of more than 10 years from the secondary market.

"Since the members wanted a detailed discussion on various investments of Employees' Provident Fund Organisation (EPFO) corpus, the matter of making investments in stock indices, government-backed bonds and increasing the minimum wage limit for the purpose of provident fund have been postponed," Kharge said.

Investment of 3-5 percent of EPFO corpus means a flow of up to Rs 13,000 crore into stock indices.

Earlier this week EPFO's advisory body, facing strong opposition from the unionists members on board, the Finance and Investment Committee (FIC) had turned down the finance ministry's proposal to invest 3-5 percent of funds in stock indices.

Secretaries of the two bodies-- Bhartiya Mazoor Sangh and Hind Mazoor Sabha-- B N Rai and A D Nagpal outrightly rejected the proposal during the meeting.

It is a general practice that the advisory body FIC's recommendations are upheld by CBT.

The finance ministry in August last year proposed to invest up to 15 percent of the EPFO corpus in stocks. But, when it did not find favour with FIC and CBT, it proposed an investment of 3-5 percent of the corpus in indices.

However, the FIC had favoured purchase of government-backed bonds with maturity period of more than 10 years from the secondary market, in its earlier meeting held on August 18 this year.

The issue of increasing wage ceiling to Rs 15,000 per month could have found favour in the CBT meeting today as a Parliamentary Standing Committee on Labour has already recommended to do so.


First Published: Saturday, December 05, 2009, 18:16

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