TUs resist Labour Ministry plot to raise EPFO investments in ETFs
At a meeting of EPFO's apex decision making body Central Board of Trustees (CBT) on Friday, unions lodged their "serious reservations" over the ministry's move to increase investments in ETFs from the current 5 per cent.
The Employees' Provident Fund Organisation (EPFO) had started investing in ETFs in last August. On ETFs, Labour Minister Bandaru Dattatreya said, "We have given a report to the CBT. In this report, 7.45 per cent (yield) has come so far. We had invested INR 7,000 crore."
He added that he informed the CBT, which is headed by the Labour Minister, about the global trends regarding ETFs and the trend in India. "In India in the changing scenario, we had thought that long term investment will benefit the ETFs. Fluctuations will be there... they will come and go but the thing is whether the percentage of investment in long term will be gainful or not," he added.
The minister said a special meeting of the CBT will be called between July 18-22 where the government will take the feedback of the unions and then take a decision. Labour Secretary Shankar Aggarwal said that till date on average, EPFO has got a yield of 7.45 per cent from ETFs and this is "almost equal to the yield on government securities".
A union leader present in the meeting said that they have protested the government's move to raise investment in ETFs. "Unions were almost unanimous in lodging their serious reservations over raising the limit on ETFs," he added.
Indian National Trade Union Congress (INTUC) Vice President Ashok Singh added, "We have strongly protested raising of EPFO investments in ETF." When asked about the protest by the unions, Dattatreya said: "They are protesting, but we are keeping the interest of the workers in view and we are not going ahead in hurry. We can go till 15 per cent, but we went with 5 per cent to test it. Our investment is long term and it will appreciate."
"We have to look into the views and feedback which we receive from various organisations and on the basis of that ultimately government will take a decision on this particular subject," he added.
Asked if unions do not agree on raising the investment limit, he said: "Ultimately, we have to take the decisions for the benefit of the workers. We are not looking after interest of unions, we are not looking after interest of the employers.
"We would like to give the workers the maximum yield, if the yield is better in equity then certainly we will go into that." Dattatreya said that CBT has also cleared the proposal for restructuring of the retirement fund body, a move that will create thousands of vacancies.
"Since two years, a lot of exercise was done for restructuring of EPFO because EPFO is increasing its coverage of providing social security benefits and this requires expanding its infrastructure. We have agreed, CBT has agreed for the restructuring," he added.
The objective of the restructuring is to increase the efficiency of the EPFO and also incentivise the workers, the minister said. "The workers are unable to get the promotions since the last 10-15 years. They will get it (now). We will work out the details and in the next special meeting of CBT, between July 18-22, we will meet and ratify it," he said.