Scrap decision to invest NPS corpus in bourses: trade unions

New Delhi, Jan 23 (UNI) Trade unions today vehemently condemned the Centre's decision to notify an interim investment pattern allowing five per cent of New Pension Scheme (NPS) corpus to be invested in stock market and suggested to scrap the move.

The Centre of Indian Trade Unions (CITU) in a statement said this decision is ''a retrograde move with ominous portents for the social security of the government employees''.

The government yesterday announced its decision to notify an interim investment pattern for investing five per cent of the funds collected under the NPS in bourses.

''Further pending the passage of the PFRDA (Pension Fund Regulatory and Development Authority) Bill, it is necessary to adopt an interim model for investment of accumulated subscription. Hence it is proposed that the investment guidelines applicable to non-government provident funds may be adopted as the interim model.

The pattern will be notified soon,'' Finance Minister P Chidambaram had said.

The interim order will also have an option of putting all the NPS money in government bonds. The move is endorsed by Prime Minister Manmohan Singh and supported by 19 states.

The initiative is aimed at providing an opportunity for better returns to NPS subscribers. The NPS corpus, which stands at Rs 1,500 crore till date, earns only eight per cent interest at present.

''The NPS is a unilateral and arbitrary measure brought in by the NDA government, which met with stiff opposition from the organisation of government employees and the centre trade unions,'' CITU added.

Citing the diversions from the present pattern of non-government provident funds, CITU said the decision is not in line with the authority vested in the Central Board of Trustees to decide on the option to invest the fund, to the maximum of five per cent, in equity.

Criticising the announcement that the government will hire fund managers to handle the investments, first of them being from public sector, CITU said the present pattern calls for the fund manager to be the leading public sector commercial bank -- State Bank of India, that is -- and not any public sector fund manager, which may include a mutual fund or insurance company dealing with stocks.

''The stock markets are not stable and there is no guarantee of income,'' CITU and Bharatiya Mazdoor Sangh (BMS) said adding that accounting to speculations pensioners may loose their money.

Both the organisations appealed to the government to drop the present notification and hold consultations with trade unions and the industry on the gamut of the social security pension system, including the demand to scrap the NPS.

UNI