Raising the hackles of trade unions for bypassing tripartite deliberations, the Centre on Thursday doubled retirement fund body EPFO’s investment limit in equities to 10 per cent from 5 per cent.
This would mean ₹13,000 crore of employee retirement funds will now flow into exchange traded funds (ETFs) during this financial year.
“We have already issued a notification raising the EPFO investment limit of ETFs to 10 per cent from the current 5 per cent of its investible deposits,” Labour Minister Bandaru Dattatreya told reporters at a press conference here.
The EPFO, which has a corpus of ₹8 lakh crore, with ₹1,30,000 crore added this year, has already invested ₹6,577 crore in ETFs for 2015-16.
“This investment has yielded a good return of 13.24 per cent. Five per cent EPF has been invested in Nifty 50 and Sensex,” the Labour Ministry said, adding that the decision to hike investment was taken in view of the “appreciating returns”.
“The performance of the last six months from April 2016 to August 2016 shows gradual appreciation in the returns from 0.37 per cent in March 2016 to 13.24 per cent in August 2016,’ the Ministry said.
However, the Employees Provident Fund Organisation (EPFO) , which is going digital in a big way to usher in transparency, had not uploaded the notification on its website.
When asked, Chief Provident Commissioner VP Joy confirmed the notification, but admitted that it had not been uploaded. Asked why the matter had not been discussed in the tripartite Central Board of Trustees (CBT), he said: “Under the EPF Act, it is the government’s prerogative to decide the investment guidelines, as it is the highest authority.”
Dattatreya said the issue was “discussed twice in the CBT meeting. Some members had reservations against the ETF investments.”
‘Unilateral decision’Trade unions, meanwhile, lashed out at the EPFO for taking a “unilateral decision” on investing workers’ life-long retirement savings, saying they would “compel the government to withdraw the notification”.
“This government has been forced to withdraw three notifications with regard to PF. This will be the fourth,” Ramen Pandey, INTUC leader and CBT member, told BusinessLine .
He said as per law “nobody has the authority to decide on investment of PF money apart from the CBT. It has to be placed in front of the tripartite body, which is the ultimate authority.”
AITUC leader DL Sachdev, also a CBT member, said all unions would meet soon to discuss the issue and launch a protest.