THE State Bank of India will no longer be the sole manager of the employees’ provident fund. Three private financial institutions -- HSBC, ICICI Prudential and Reliance Capital -- will also get a share of the PF corpus, amounting to Rs 2.4 lakh crore with an annual addition of Rs 30,000 crore.
Since the SBI had delivered low returns in recent years and the government, often, had to chip in to ensure the guaranteed rate of interest to the employees, it was felt private fund managers should be roped in to handle the PF money more efficiently. After bids were invited, the Employees Provident Fund Organisation finalised the three firms.
Since provident fund is often the only post-retirement security employees have, it is, therefore, natural for many contributors to get anxious about the future of their money in private hands. The Left and the BJP, once again united on an issue, have already decried the “move to give workers’ money to private companies”.
The BJP has described it as an “economic prize given to private firms for the kind of politics the nation saw during the past 15 days”. The inclusion of Mr Anil Ambani’s Reliance Capital has, perhaps, given rise to such allegations as the industrialist is closely aligned with Samajwadi Party leader Amar Singh. The EPFO selected these companies because their bids were the lowest. Two others -- HDFC and Birla Sun Life -- were rejected on legal advice as they had offered to manage the PF money at zero fee.
The part-privatisation of the PF management has followed two years of efforts by the EPFO’s finance and investment committee and materialised as the government has got rid of the Leftists. Central employees’ pension funds, too, are likely to go the same way. Since a part of these funds is to be deployed in stock markets, there is uneasiness among some sections of employees.
There are the risk-takers and there are the risk-shirkers. The government can give them a choice between guaranteed and market-driven returns. After all, crores of employees trust mutual funds and insurance companies with their hard-earned money, much of which finds its way into stock markets.
