Amid reported differences between the ministries of labour and finance, the former today asserted that the decision of EPFO trustees would be "final and supreme" on whether a portion of Rs 5 lakh crore of provident funds should be invested in stock markets.
The Finance Ministry wants the Labour Ministry to follow the investment pattern that is has notified, which provides for up to 15 per cent of the corpus in stock markets.
"Central Board of Trustees (CBT) decision is final and supreme. We would go by that. This matter would be placed before trustees in their next meeting scheduled on September 10", Labour Secretary P C Chaturvedi told reporters at CII event.
"We are careful in investing money of our workers. People call us very conservative, but paramount thing is safety of principal amount (deposits) of workers," he added.
In a recent letter to Chaturvedi, Finance Secretary Ashok Chawla had referred to the changes by made in EPF schemes earlier without any discussion with CBT and said it (Labour Ministry) could take a similar view on the issue of investment pattern of provident funds.
On the letter, Chaturvedi said, "There are many missing links in the advice of Finance Ministry (to invest in equity). There are many issues in that."
He added, "When you say equity, it is not face value. It is not that you are getting Rs 10 share for Rs 10. You are getting that at Rs 100. Tomorrow this Rs 100 could become Rs 120 or Rs 80."
Chaturvedi said there were several issues, operational as well as about the returns, involved in the case. "You don't get anything by way of interest (by investing in equity). It is only when you liquidate that share only then you get return."
He said the Finance Ministry's advice is based on the experience of New Pension Scheme (NPS) where they have admitted that there is no data available to establish that "what Labour Ministry is doing is inferior to what they are advising."
Chawla's letter said that while NPS for central government employees could generate a weighted average investment return of 14.82 per cent in 2008-09, EPF has been giving only 8.5 per cent returns to its subscribers for many years.
The EPFO has been giving 8.5 per cent return annually to its subscribers since 2005-06.
