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Monday, Jan 05, 2004

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Provident Fund

The announcement of 0.5 per cent bonus above the statutory interest rate of 9 per cent on the Employees' Provident Fund by the Ministry of Labour for 2003-2004 has given room for another controversy. With the announcement of 0.5 per cent bonus, an effective interest rate of 9.5 per cent is now being credited to the EPF members' account.

There are certain other category of establishments called "exempted establishments" which institute their own Provident Fund scheme and are statutorily bound to afford benefits to their employees on a par with or better than the benefits under the Employees' Provident Fund Scheme, 1952.

These exempted establishments are at present under an ambiguity whether to credit 9 per cent of statutory interest or the 9.5 per cent of effective interest as declared by the Labour Ministry.

Accreditation of 9 per cent interest by the exempted establishment will reduce the total quantum of benefit to their employees below the quantum of benefits conferred under the EPF scheme and therefore, will result in cancellation of "exemption."

On the other hand, there is no moral obligation on the part of the exempted establishment to credit the bonus of 0.5 percent which was announced by the Labour Ministry in view of the golden jubilee celebrations of the Employees Provident Fund Organisation.

It is, therefore, high time the Centre looked into the matter and clarified whether the exempted establishments are required to credit a minimum or 9 per cent or 9.5 percent of interest to their employees.

C. Ramesh

Keeramangalam (TN)

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