The Hindu Business Line : Meet soon on EPF investment

The Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO) are expected to meet on March 26 in Hyderabad to consider changes in the funds investment strategies for the next fiscal including the possibility of investing in equities.

The Minister of State for Labour, Mr Chandra Sekhar Sahu, told newspersons here today that "the CBT will decide on investing 5 per cent of its corpus in the equities and what higher returns it can fetch because the safety of the subscribers' money cannot be compromised."

EPFO's total corpus as on October 2005 stood at more than Rs 1,50,000 crore and approximately another Rs 25,000 crore incremental deposits come every year.

The entire corpus is invested in five categories of securities — Central Government securities, State Government/Central Government guaranteed securities, State development loans, public sector units and special deposit scheme run by the Finance Minister.

With effect from April 1, 2005, the Finance Ministry amended the guidelines of investment of provident fund money and created an enabling provision to allow all non-Government provident funds, superannuation and gratuity funds to invest in equities of companies that have investment-grade debt ratings from at least two rating agencies.

The Minister said that it has become necessary because of the mismatch between EPFO's liabilities and its interest earnings through deposits in permitted securities only.

During 2004-05, the organisation had to dip into its reserves to pay a 9.5 per cent interest. During 2005-06 its income was Rs 6,523.15 crore as against Rs 6,889.04 crore liability for paying 8.5 per cent interest to the subscribers. "If we are able to decide on investments in this year only then we would be in a better situation in the next year," Mr Sahu said.

Taking over private funds

The Minister also said that the possibility of EPFO taking over the private provident funds that are currently under the purview of the Income-Tax Act would also be discussed in the CBT meeting. According to this year's Budget proposal, the excluded provident fund trusts set up by companies under the Income Tax Act will have to further seek exemption from the EPFO, which would bring them under the EPF Act.

Whether such a condition would prompt these companies to hand over the charge of the fund managed by them to the EPFO would also be discussed and whether in such a case the organisation should take the additional assets, he said.

More Stories on : Social Security | Investments | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Different strokes

`No single entity called Tata Group'

Meet soon on EPF investment

Temasek picks 9.9% stake in Tata Tele

TRAI recommends Rs 200 one-time fee for number portability

Bull run hits pause button

It's a correction: Chidambaram

55,000 new fixed line connections added in Feb

Lessons from Anand for Pentagon!