Labour ministry seeks finance ministry guarantees for PF investments in stock market

The labour ministry has asked the finance ministry to provide guarantees on the safety of workers' pension funds for investing part of the Rs5,00,000 crore provident fund corpus in the stock market.

The finance ministry has for long been insisting on channeling pension funds to the stock market as, according to it, investments in stocks would bring better returns to employees.

The labour ministry, which has been resisting the temptation of the stock market so far, also seems to be looking for avenues to boost returns on PF investments. Also, the Employees Provident Fund Orgnisation (EPFO) needs to increase or at least maintain the current year's 9.5 per cent return offered on PF corpus to justify its investment stance.

Both the labour ministry and the FPFO consider stocks as high-risk investment.

"If the investment in the capital market is so good, then there should be no problem for the government to provide a guarantee regarding the safety of the workers' capital funds and a reasonable rate of return on the capital," labour secretary PC Chaturvedi said in a letter to finance secretary Ashok Chawla.

The Central Board of Trustees of Provident Fund Organisations had, at its meeting on 15 September, also expressed reservations on investing pension funds in stock markets.