Labour Min, unions spar over raising EPFO investments in ETFs

Labour Ministry and central trade unions are at loggerheads over raising the investments of retirement fund body EPFO in stock markets through Exchange Traded Funds (ETFs).
At a meeting of EPFO's apex decision making body Central Board of Trustees (CBT) today, unions lodged their "serious reservations" over the ministry's move to increase investments in ETFs from the current 5 per cent.
The Employees' Provident Fund Organisation (EPFO) had started investing in ETFs in last August.
On ETFs, Labour Minister Bandaru Dattatreya said, "We have given a report to the CBT. In this report, 7.45 per cent (yield) has come so far. We had invested Rs 7,000 crore."

He added that he informed the CBT, which is headed by the Labour Minister, about the global trends regarding ETFs and the trend in India.
"In India in the changing scenario, we had thought that long term investment will benefit the ETFs. Fluctuations will be there... They will come and go but the thing is whether the percentage of investment in long term will be gainful or not," he added.

The minister said a special meeting of the CBT will be called between July 18-22 where the government will take the feedback of the unions and then take a decision.

Labour Secretary Shankar Aggarwal said that till date on average, EPFO has got a yield of 7.45 per cent from ETFs and this is "almost equal to the yield on government securities".
A union leader present in the meeting said that they have protested the government's move to raise investment in ETFs.
"Unions were almost unanimous in lodging their serious reservations over raising the limit on ETFs," he added.
Indian National Trade Union Congress (INTUC) Vice President Ashok Singh added, "We have strongly protested raising of EPFO investments in ETF."
When asked about the protest by the unions, Dattatreya said: "They are protesting, but we are keeping the interest of the workers in view and we are not going ahead in hurry. We can go till 15 per cent, but we went with 5 per cent to test it. Our investment is long term and it will appreciate.