EPFO move to invest 15% corpus in stocks raises storm in House

NEW DELHI: The government’s plan to invest in the stock market 15% of the EPF corpus instead of the earlier 5% ran into rough weather in the Raj ya Sabha on Tuesday

NEW DELHI: The government’s plan to invest in the stock market 15% of the EPF corpus instead of the earlier 5% ran into rough weather in the Raj ya Sabha on Tuesday with lawmakers cutting across party lines to oppose the proposed move.

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Senior Congress leader Ahmed Patel said the government was “playing with the hard-earned money of employees and labourers ”.“Is the government willing to give a guarantee on the returns to be earned from the stock market ?” Patel asked, adding that investing in the stock market has proved to be a loss-making exercise as the return was 7.45% compared to 8.8% offered under the EPF scheme.

At present, the government invests 5% from the Employees’ Provident Fund Organisation (EPFO), the retirement fund body, in the Exchange Trade Funds( ETF), which holds several assets such as stocks, commodities and bonds.

Terming the criticism “totally incorrect ”, labour minister Bandaru Dattatreya said: “These (EPF) are social security amounts. That too workers’ amount. As head of the Central Board of Trustees, the apex decision making body of the EPFO, my paramount interest will be to safeguard the workers’ interest.”

Patel, however, was not satisfied with the minister’s response and said he will move a resolution to disapprove the government policy to invest up to 15% EPFO money in stock market.

Earlier in the day, MPs from CPI(M), BJD, Trinamool Congress and the Samajwadi Party argued strongly against the move. “The government is interested in doing this to favour the speculator to speculate further and keep the stock market hot,” said CPI(M) leader Tapan Sen.

He said trade unions, including RSS-affiliated Bhartiya Mazdoor Sangh, had opposed the move when it was discussed at a meeting of the Central Board of Trustees (CBT) on July 21. “CBT has said they do not want any extra returns. The move to invest 5% in ETF has resulted in a loss of 400 crore in the first 10 months .”

Trinamool Congress’ Derek O’ Brien said the government was aping the American model. “The root of the problem is that I suspect that you are trying to use the American model. The American model has an independent retirement fund and social security account which we don’t have.”

In his reply, Dattatreya said the workers’ money in EPFO had not been diverted to stock markets but was invested in funds which are safe and profitable. “Of the total amount, 75% is being invested in Nifty and the remaining 25% in BSE. The funds are not invested in individual shares,” he said.

The minister said the total EPF amount invested so far in ETF is Rs 7,468 crore and its current market value is Rs 8,024 crore, which is an interest of 7.45%. He assured the House that the government was maintaining a “cautious approach”.