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The Unit Trust of India (UTI), the country’s oldest mutual fund and also the largest employer in the asset management business, has a staff welfare fund (SWF) of about Rs 300 crore. But neither the mutual fund nor its employees can touch the money.
The fund became a part of the Specified Undertaking of UTI (Suuti) over 10 years ago. The mutual fund and its employees have been trying to get it back into the fold ever since, but without success, according to three people familiar with the development. “The fund was set up out of contributions from the US-64 scheme, and was transferred to Suuti as a result,” said one person.
Suuti was formed in 2003 to house the separated assured return schemes of the erstwhile UTI after their collapse. US-64 was the fund’s flagship scheme. Today Suuti’s holdings include stakes in ITC, Axis Bank, and Larsen & Toubro. The total value of these holdings is around Rs 55,000 crore.
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Various representations on getting SWF back to UTI have been made to the government over the years, according to another person.
“There have been some attempts made, but no real progress has actually taken place,” said a second person.
“The money could be put to use to provide a pension option to employees, many who have retired have not seen a revision in the last ten years because their pensions do not have dearness allowance (DA),” said another individual.
The DA is a component of salary or pension which adjusts income for inflation.
The SWF had a balance of Rs 288.15 crore at the end of the financial year ending in March 2013 (FY14), according to Suuti financials. It received interest of Rs 22.6 crore during FY14. The size of the fund as per the latest balance sheet was Rs 310.29 crore.
This makes the welfare fund nearly three times the size of the UTI Employee’s Superannuation Fund, which was formed after the bifurcation. A superannuation fund is made up of contributions from the employer and the employee and provides an income to employees after they retire.
UTI’s latest financials mention that the UTI Employee’s Superannuation Fund inherited a portion of the employee benefit scheme of the undivided UTI, although the staff welfare fund was not a part of it.
“The company…formed a Pension Trust, which inherited the Employees Group Superannuation Fund from the erstwhile Unit Trust of India. The company is making 10 per cent of basic salary and additional pay, wherever applicable, as employer contribution to this trust and any shortfall in the fund size as per the scheme…,” according to UTI’s latest financials.
The fund has assets of Rs 104.64 crore, which is around Rs 34.36 crore more than its current obligations, according to the financials.
Interestingly, even if the fund was to be considered a part of SUUTI, it would be hard-pressed to deploy it there. SUUTI does not have any employees.
“Suuti has no permanent employees and all deputationists are deputed from other institutions,” according to information on the Suuti website.
A UTI spokesperson declined to comment on the matter.
