"Our Board of Trustees felt investments in the capital market are unsafe and do not serve well for someone like us who want very stable returns," Central Provident Fund commissioner, Samirendra Chatterjee, told reporters on the sidelines of a function organised by AK Capital Services in Mumbai.
"If they want us to invest, please give us a guarantee for the same, we will invest," he added.
Citing revised regulations, the ministry of finance has been asserting that it has a right to prescribe the investment patterns for retirement funds and has been repeatedly asking for up to 15 per cent of the corpus to be invested in equities.
However, Chatterjee said the Employees Provident Fund Organisation (EPFO) goes by the rules drafted in 2003 and not the revised ones made in 2008.
EPFO's funds under management has swelled by Rs 25,000-crore in the first half of the current fiscal to Rs 3,25,000-crore, he said.
The EPFO and the company-run PF trusts are currently allowed to invest only in more secure investments like bonds and Government securities which deliver a stable return.
"I work for the common man...a fall in stocks is not infrequent and how can I explain to a person that his investment corpus has fallen? Such things work well for mutual funds who run on net asset values, not for us," Chatterjee said.
On the zero interest to inoperative accounts policy to be implemented from May 2011, he said the Trust expects withdrawals of up to Rs 10,000-crore by "savvy" investors who have locked-in huge chunks for guaranteed, tax-free returns.
"We have Rs 15,000-crore in inoperative accounts and I expect withdrawals of up to Rs 10,000-crore by savvy investors. Some of these accounts have contributions up to Rs 25-lakh," the Commissioner added.
According to a new policy which will come into effect from May 2011, accounts which are inoperative for more than three-years will not be paid any interest.
On concerns if private fund trusts would be able to pay an additional one per cent interest on contributions, Chatterjee said they should dig into their reserves for meeting the requirement if they are not able to fund it through yields on investments alone.
Source:Economic Times
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