New Delhi: Given the extent of the
malfeasance due to the extraordinary risk exposure to virus-infected
IL&FS bonds (IANS has done a series of stories), the Finance
Ministry has now asked Employees Provident Fund Organisation (EPFO)
whether the fund has enough surplus to pay the 8.65 per cent interest
rate for 2018-19.
With 1,400 top-of-the-line companies, schools, MNCs, PSUs and what have you invested in what were originally 'triple A' rated bonds succumbing to the vagaries of a toxic company, the life savings of white and blue collar salaried employees is at peril.
In a letter to the Labour and Employment Ministry, the Finance Ministry asked why the surplus after payment of the EPF interest rate for previous years can be seen only in the fund's 'estimates' and not clearly in the 'actuals'. It has also asked for details about EPFO's exposure to murky entities. The total exposure to EPF and pension funds is Rs 9,700 crore.
In EPFO accounts for 2016-17, there exists information about 'income over expenditure' on a cumulative basis, but it does not provide clear details. In case of a default, the liability to pay to EPFO subscribers would be with the government. That's why due diligence of the EPFO accounts is being undertaken.
The EPFO's investment in IL&FS was pegged around Rs 574 crore by Standing Committee on Labour in its report. Firms, which manage the EPF of their employees on their own, had an even higher exposure to IL&FS than the retirement fund body. The committee had warned the Government that this could put workers at a disadvantage.