Pension fund body Employees’ Provident Fund Organisation (EPFO) has called a meeting on March 30 to consider investing up to 15% of its money in stock market, in a bid to get higher returns for investments.
The proposal, fiercely opposed by non-BJP trade unions and Opposition parties, has the Narendra Modi government’s support.
As of now, the EPFO invests 5% of its fund in stock market, in select funds that are considered safe. The pension manager has more than ₹1.35 lakh crore in its kitty.
In 2015, the Centre had allowed 5% of the EPFO fund investment in assets like stocks, commodities and bonds through Exchange Trade Funds (ETF).
The proposal to allow further pumping of funds into the stock market has been lying unattended for many months.
The trade unions and the government are at different poles over further exposure of pension to the volatility of stock markets.
While the unions alleged that in the first 10 months the ETF lost ₹400 crore, labour minister Bandaru Dattatreya claimed that till last year, ETF investment of ₹7,468 crore has the value of ₹8,024 crore — around 7% profit.
The labour ministry also maintained that they adopt a “cautious approach” while investing workers’ hard earned money. It underlines that the money is not put in individual shares.
“We are wholeheartedly opposed to the idea. More so, because when the government calculates the annual interest rate, they never consider the ETF returns because they don’t sell those stocks,” says DL Sachdev, EPFO board member and national secretary of AITUC.
Earlier, the Bhartiya Mazdoor Sangh, the trade union wing of the RSS, had also opposed enhanced stock market exposure to the pension funds.