The Hindu Business Line : EPFO can take back Rs 55,000 cr invested in special deposits

New Delhi, Sept. 23 The Ministry of Finance has proposed to the Ministry of Labour that the latter could take back the Employees Provident Fund Organisation’s (EPFO) investments in the Special Deposit Scheme (SDS) run by the Finance Ministry.

EPFO, which is the second largest financial institution in the country after Life Insurance Corporation in terms of the amount of funds managed by it, comes under the administrative control of the Labour Ministry. It had appointed four fund managers earlier this month.

The developments took place at a meeting held late last week between the Finance Minister, Mr P. Chidambaram, the Labour Minister, Mr Oscar Fernandes, and leaders of AITUC, HMS, BMS and UTUC (LS) who are members of the Central Board of Trustees (CBT) of the EPFO. The meeting was also attended by employers’ representatives on the CBT.

The Finance Minister is of the view that the Government can raise funds at rates lower than the eight per cent it is paying on SDS deposits currently, Mr D.L. Sachdev, Secretary of AITUC and a senior CBT member who attended the meeting told Business Line.

“The Finance Minister also wanted to know about comparative details of EPFO’s earnings from SDS investments and non-SDS investments which would be provided soon,” he said.

EPFO has around Rs 55,000 crore invested in the SDS which fetches a return of eight per cent.

Fresh deposits from EPFO into the SDS were stopped in 1997. Till 2001, SDS deposits earned 12 per cent interest. In 2001, the rate was reduced to 11 per cent. Then interest rates were revised further down to eight per cent in 2003.

EPFO manages a total corpus of around Rs 2,40,000 crore. Apart from the investments in SDS another around Rs 80,000 crore pension funds collected by it after the New Pension Scheme (NPS) was introduced in 1995, is in the Centre’s account.

The remaining funds are invested in various Government bonds and with various public sector banks, Mr Sachdev said.

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