EPFO to discuss investing part of corpus in shares / Dec 23, 2005 / Indian Express

From Indiapensions

EPFO to discuss investing part of corpus in shares

The Central Board of Trustees of the EPF Organistion will consider a proposal to invest a portion of EPF money in shares and private sector debt instruments in January. The proposal, put forward by the government, would help it earn enough to maintain a 9.5 per cent interest rate on EPF deposits.

According to the proposal, five per cent of Rs 40,000 crore which is added annually to the fund would be invested in companies that have an investment grade debt rating from at least two credit rating agencies. The suggestion has not been accepted by the EPFO's Finance and Investment Committee, but making a concession, a Left member on the Board of Trustees of EPFO said the Left trade unions would not object to the proposal if the money was invested only in PSU shares. We do have a problem about investing this money, which comes to about Rs 2,000 crore, in shares. But we will have no objection if it is invested in PSU shares like those of oil companies and IFFCO, said D L Sachdeva, who attends meetings of the EPFO trustees on behalf of the AITUC. The concession reflects a change from the Left's earlier opposition to any plan to link EPF to the share market.

The other proposal before the EPFO trustees would be to invest up to 10 per cent of the corpus in private sector debt instruments and an equity-linked mutual fund scheme regulated by SEBI.

Later, Prime Minister Manmohan Singh, who met 50 MPs, on the issue conceded little ground and suggested to the MPs that with the inflation rate holding true the rate of interest was adequate. The MPs from the Left parties, the SP and RJD met him in Parliament House today where the PM only said he would take up the matter with the Labour Minister and the Finance Minister.