The Hindu Business Line : The monk who is sold on PF reforms

He is a preacher whose sermons these days are laced with ideas that financial services circles appreciate more than anybody else. In fact, his forte includes returns on investments, capital protection and more.

Meet Jaishankar Maharaj, in charge of Ramkrishna Mission's PF Trust, who speaks out loudly in favour of pension reforms, carrying his message right to the government, especially key players in the administration.

And his concern is not out of place either. There is more to RKM than humanitarian work; the Mission, with its formidable investment kitty, is quite sought after by money managers of various hues. Jaishankar Maharaj happens to be a vocal champion of the reforms that are expected to change the state of the country's pensions segment.

Going by what he says, policymakers need to attend to some key issues, some of them related to alternative investment options and labour laws. PF trusts are mandated to invest heavily in government securities and other quasi-government instruments, which can often lead to relatively low returns. The trusts, therefore, need to explore other ways of allocating their resources; equity investments, in fact, are being seen as an important alternative.

At a more micro level, the Mission points out that declaration of interest rates (by the PF authorities) takes a fairly long time, a situation that needs to be corrected. The rate of interest should be announced well in time, perhaps before a pre-determined deadline, it felt.

"All the issues should be addressed. These include those related to our investment pattern. Taxation is also an important area," Jaishankar Maharaj noted, referring to the need to revise rules governing PF trusts.

Incidentally, chambers of commerce and other bodies have pointed out that an amendment in the Income Tax Act, following the Finance Act 2006, has rendered it compulsory for such trusts to secure final exemptions before end-March next year.

The amendment has also included a new clause to address issues pertaining to small investors in recognised provident funds. However, it has little to do with the provident funds to which the PF Act relates.

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