New Delhi: Under pressure from employees'
representatives, a key advisory body of retirement fund
manager EPFO today rejected the Finance Ministry's proposal to
invest 3 to 5 per cent of the Rs 2.57 lakh crore corpus in
stock indices.
It is now left to EPFO's apex body Central Board of
Trustees (CBT) - which will meet on December five - to take a
call on the Finance and Investment Committee's recommendations
to reject the Finance Ministry proposal of investing in stock
indices.
"Facing strong opposition from the employees'
representatives, the Finance and Investment Committee (of
EPFO) at its meeting today disagreed over parking 3-5 per cent
of retirement fund in stock indices," a source said.
"Since the issue has been pending for long with FIC, the
view of the committee is likely to be placed before CBT for
taking the final call on December 5," the source said.
Ahead of FIC meeting, the employees' and employers'
representatives had discussed the issue, but could not reach a
consensus.
The two empolyees' representatives--Bhartiya Mazoor Sangh
Secretary B N Rai and Hind Mazoor Sabha Secretary A D Nagpal--
present in the meeting outrightly rejected the proposal.
Under strong opposition from them, the EPFO official
decided to place the rejection in record over investment in
stock indices before the CBT.
It is a general practice that FIC recommendations are
accepted by the CBT. The Employees Provident Fund Organisation
(EPFO) has not invested in stock markets so far.
"The Employees' Provident Fund Miscellaneous Provision
Act 1952 mandates for better returns to employees. Here better
means more than what banks are paying on deposits," FIC member
and Secretary Bhartiya Mazoor Sangh B N Rai told PTI.
Rai said, "If the EPFO investments are not yielding
higher returns than bank's deposit rates, then government
should compensate as they have done for the industry by
providing stimulus package."
"We would not favour trading of retirement fund in stock
markets. We do not want to take risk on retirement money of
employees," he added.
Another FIC member and Secretary, Hind Mazoor Sabha A
D Nagpal said, "We can not approve investment of about 4.5
depositors money in stock markets in any way. This is for
their old age. Who would be responsible if stock indices
crashes tomorrow."
Earlier in August last year, the Finance Ministry had
proposed to invest up to 15 per cent of the retirement money
in stocks, but when the CBT turned it down in July this year,
the ministry diluted its stand by suggesting investment of 3-5
per cent of funds in stock indices.
During the meeting Union Labour Minister Mallikarjun
Kharge who is heading the CBT, asked for a detailed
presentation.
FIC met on August 18 where an EPFO official pleaded for
parking 3-5 per cent of the funds in the stock market saying
"Index-based strategy for investment in equities would be most
suitable for EPFO's need."
-PTI
First Published: Tuesday, December 01, 2009, 23:39