New Delhi: Retirement fund body EPFO’s investments in stock markets are not backed by any guarantee by the government as these are subject to market movements, Parliament was informed on Wednesday.
“The government has not provided any guarantee for such investments in the stock market as investment in such instruments are subject to market movements,” labour minister Bandaru Dattatreya said in a written reply to Rajya Sabha.
“Some of the trade unions have expressed reservations over the decision to invest in equity as they are concerned about the risk associated with the investments in stock market,” the minister informed the House.
EPFO started investing in Exchange Traded Funds (ETFs) from August 6 and it has plan to invest five per cent of its incremental deposits into ETFs during the current fiscal.
Mr Dattatreya explained that EPFO’s apex decision making body the Central Board of Trustees (CBT) has approved the proposal of investing in ETFs after considering the possible risk associated with the investments.
Minister of state for finance Jayant Sinha in a reply on Tuesday had said, “Investments in ETF started in August and a total of Rs 3,174 crore has been invested till November 30.”
EPFO expects to receive Rs 1.2 lakh crore as incremental deposits during the current fiscal. Thus, it is likely to invest around Rs 6,000 crore in ETFs during 2015-16.
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