About Rs 6,000 crore of EPF (Employees' Provident Fund) money would be invested in equities by March 2016 with a view to <g data-gr-id="47">get</g> higher returns, said Union Minister of State for Labour Bandaru Dattatreya on Monday.
"We proposed to go for equity participation with this Rs 6,000 crore by <g data-gr-id="49">end</g> of March 2016. This process has already begun. Our portfolio managers, SBI, Reliance and HSBC bank and some other organisations are part of this portfolio management. Through them, we have facilitated the entry of these funds into the market. This is being done for the first time by the Labour Ministry," he told reporters here.
The investment would begin with 1 <g data-gr-id="38">per cent</g> of EPF- related money which could eventually go up to 15 <g data-gr-id="39">per cent</g>, he said. "Approximately Rs 8,30,000 crore of EPF-related money is there (with Government). The Finance Minister had said in his Budget speech that portfolio management (of the funds) should not be done by old methods alone and favoured equity participation of 5 to 15 <g data-gr-id="40">per cent</g>," Dattatreya said. His Ministry discussed the issue and sought a report from a consultancy, which noted that workers in other countries got higher returns through equity participation of their funds, Dattatreya said.
"They (consultancy) gave a report to this effect. We made a presentation on this before the Central Board of Trustees (of EPF). We gave a presentation to all trade union leaders, entrepreneurs, state government representatives and officials in our Ministry.
"We took a decision in consultation with our officials to make equity participation of Rs 6,000 crore in <g data-gr-id="43">first</g> phase. “One per cent (of the corpus) to begin with, then two per cent, three per cent, four per cent and finally five per cent." Asked how the Ministry proposes to guard the EPF <g data-gr-id="41">money from</g> incurring losses in equity markets, which are known to be volatile with no guaranteed returns, he said these investments are being made for a long haul.
"These are long-term investments. These are not investments for one year or two years. They give more returns. Our investments are for 10 years or 15 years. Though it may appear to be causing losses in the short term, in <g data-gr-id="50">long</g> term, it would be giving profits. We are giving (interest of) 8.75 <g data-gr-id="44">per cent</g> now. It (equity investment) is likely to fetch more than 10 <g data-gr-id="45">per cent</g>," Dattatreya maintained.
Employees' Provident Fund Organisation (EPFO), a retirement fund body, has more than 5 crore subscribers across the country.
EPFO to invest around Rs 410 <g data-gr-id="105">cr</g> in ETFs every month
Retirement fund body EPFO has decided to invest around Rs 410 crore in exchange <g data-gr-id="87">trade</g> funds (ETF) every month during the current fiscal. “EPFO can invest around Rs 410 crore in ETF every month during this fiscal.
“The body has planned to invest 5 <g data-gr-id="84">per cent</g> of its incremental deposits every month,” a senior EPFO official said.
In the present scenario, the EPFO has received an average monthly incremental deposits of Rs 8,200 crore during this financial year so far. Thus, 5 <g data-gr-id="80">per cent</g> of incremental deposits comes to around Rs 410 crore.