EPFO for lower rate of interest at 8.25 per cent
23 Dec 2011
The advisory panel of retirement fund body Employee Provident Fund Orgasnisation (EPFO) is seeking a lower rate of interest of 8.25 per cent for the current fiscal as against 9.5 per cent last year, a move that would affect over 4.7 crore subscribers.
The unions' representative on EPFO's advisory body, Finance and Investment Committee (FIC), has demanded the rate be maintained at 9.5 per cent for 2011-12.
According to the PTI which quoted a source privy to the development, FIC opined that payment of 8.25 per cent rate of return to its 4.7 crore subscribers during this fiscal was feasible.
The source added that the union representatives attending the meeting demanded maintaining 9.5 per cent rate of return as given in 2010-11 and pointed out inaccuracies in income projection for this fiscal by EPFO officials.
The FIC's recommendations would now be tabled before the Employees' Provident Fund Organisation's (EPFO) apex decision making body, the Central Board of Trustees' (CBT), headed by labour minister for a final decision on the issue in its meeting scheduled for today.
The source added the employees' representatives in the FIC meeting sought clarification about the income estimation error which was Rs458.73 crore, pointing out that when the rate of return was fixed on over 85 per cent of the investment made by the EPFO, how the amount could be calculated on the entire possible income of the body.
The EPFO has deducted 2.5 per cent (Rs458.73 crore) as estimation error from an estimated income of Rs18,349.20 crore in FY12 and projected a sum of Rs17,890.47 crore as income, according to the source.
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