EPFO defers decision on higher interest rates on pf deposits demanded by unions
09 Apr 2010
Under pressure from trade unions that want the rate of interest on provident fund deposits to be raised, the EPFO today deferred a decision on interest rate for deposits for 2010-11. Unions want the rates to be hiked from the current 8.5 per cent to 9.5-10.5 per cent.
The Central Board of Trustees (CBT), the apex decision making body of the Employees Provident Fund Organisation (EPFO), has however, allowed investment from the funds in corporate bonds of joint venture companies in which the government holds a stake of at least 26 per cent, according to an official spokesman.
The CBT meeting was chaired by labour and employment minister Mallikarjun Kharge. It also cleared the proposal for hiking insurance benefit under Employees Deposit Linked Insurance scheme from Rs60,000 to Rs1lakh.
The decision on the interest rates, which will have wide reaching implications given the 4.7 crore subscribers, is expected to be taken at the next meeting of the CBT according to the spokesman.
The members will meet finance minister Pranab Mukherjee to discuss the matter further.
The EPFO, holds a corpus of about Rs2.5 lakh crore. It will have a surplus of Rs15.26 crore after payment of 8.5 per cent interest. However, 8.75 per cent interest, as per the unions' would leave it in deficit of Rs426.23 crore.
As per the EPFO's Finance and Investment Committee's (FIC) recommendations an interest of 8.5 per cent for the current fiscal, was to be paid. However, the final decision in the matter would have to be taken by CBT, a body headed by labour and employment minister Mallikarjun Kharge.
The meeting to be held might deliberate on the issue of extending the wage ceiling to cover employees under the EPF scheme and help them avail provident fund benefits.