EPF Board rejects proposal to invest money in debt market
Central Board of Trustees turned down the proposal citing safety and security factors in the investment pattern. 7 ways to avoid the growth traps
By PTI |
NEW DELHI: The central board of Employees Provident Fund (EPF) on Thursday rejected a proposal for investing retirement funds in debt instruments like rupee bonds.
A meeting of the Central Board of Trustees (CBT), chaired by Union Labour Minister Oscar Fernandes, turned down the proposal for parking money in the debt market citing safety and security factors in the investment pattern.
A proposal to invest five per cent of PF money in the equity market was rejected earlier following opposition from trade unions.
CITU leader and a member of the Central Board of Trustees W R Vardharajan told reporters: "We have rejected the proposal of government to invest (subscribers' money) in the equity market."
"We do not think that this proposal is a safe option. (Even if the money is invested in blue-chip stocks) but it is still not safe. The trust factor is certainly a crucial and important thing to be taken into consideration," said Vardharajan.
A draft of investment pattern was prepared in September 2007. The draft suggested investing part of the PF money in equities share market and rupee bonds. It also suggested the option of multiple fund managers to administer the EPF money.
The agenda of the meeting was also to discuss the conversion of a single fund manager into multiple fund managers. The State Bank of India was the sole manager of the EPF money so far. The government will now introduce other banks as fund managers to create competition and for the betterment of services as per the draft.
However, the board has not decided on introduction of private banks as fund managers. A three-member committee has been formed to work on the guidelines to select banks for administering the funds.
A meeting of the Central Board of Trustees (CBT), chaired by Union Labour Minister Oscar Fernandes, turned down the proposal for parking money in the debt market citing safety and security factors in the investment pattern.
A proposal to invest five per cent of PF money in the equity market was rejected earlier following opposition from trade unions.
CITU leader and a member of the Central Board of Trustees W R Vardharajan told reporters: "We have rejected the proposal of government to invest (subscribers' money) in the equity market."
"We do not think that this proposal is a safe option. (Even if the money is invested in blue-chip stocks) but it is still not safe. The trust factor is certainly a crucial and important thing to be taken into consideration," said Vardharajan.
A draft of investment pattern was prepared in September 2007. The draft suggested investing part of the PF money in equities share market and rupee bonds. It also suggested the option of multiple fund managers to administer the EPF money.
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The agenda of the meeting was also to discuss the conversion of a single fund manager into multiple fund managers. The State Bank of India was the sole manager of the EPF money so far. The government will now introduce other banks as fund managers to create competition and for the betterment of services as per the draft.
However, the board has not decided on introduction of private banks as fund managers. A three-member committee has been formed to work on the guidelines to select banks for administering the funds.
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