EPFO defers key decisions on investment options
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
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.