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Min Awaits EPFO Panel Nod on ETF Investments

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The labour ministry has moved a step closer to doubling incremental employee provident fund investments in equity to 10% in spite of opposition from central trade unions.
An expert committee set up by the finance, audit and investment committee (FAIC) of retirement fund body Employees' Provident Fund Organisation (EPFO) has favoured such an increase. The government has now asked FAIC to take a decision.
Once approved by FAIC, the labour ministry will present the decision before the next board meeting of EPFO for information, following which the new rate of investment will be notified.
“It is the government's right to decide on EPFO's investment in equity and whether trade unions agree to it or not we may go ahead with the increased investment as proposed by the expert group,“ a senior government official told ET on condition of anonymity .
The panel set up by FAIC has suggested doubling the investment in exchange traded funds (ETFs) to make it a meaningful contribution to overall portfolio return of EPFO. The panel has pointed out that at present EPFO's equity investments constitute less than 1% of the total corpus compared with global average of 30%.
EPFO had so far invested 5% of incremental investible deposits in ETFs despite opposition from labour unions. The amount invested by EPFO in ETFs was Rs 7,468 cro re as on June 30, yiel ding a return of 7.45%.
The EPFO is estimated Rs 1.35 lakh crore to have ` as investible deposits in current fiscal.
“All the unions have unanimously said that we were against the idea and would conti nue to oppose,“ A K Padmanabhan of CITU said after the meeting.
UNCLAIMED FUNDS
Earlier in the day, trade unions, including RSS-affiliate Bharatiya Mazdoor Sangh (BMS), disrupted the central board of trustees (CBT) meeting of EPFO, protesting against the government's decision to appropriate unclaimed PF money for funding senior citizens' welfare schemes.
The Economic Times New Delhi,27th July 2016

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