The Hindu Business Line : EPF rate hike

The decision of the Prime Minister, Dr Manmohan Singh, to increase the rate of interest on EPF to 9.5 per cent, though welcome, has serious financial ramifications. The Central Board of Trustees, EPF recommended an interest rate of 8.5 per cent after taking into consideration the financial viability.

Though the interest rate is declared by the Centre, it is necessary that the recommendation of the CBT be given due consideration by the Government. It is also important that more than 85 per cent of the money has been invested in the Special Deposit Scheme and the Government has categorically stated that the interest rate on SDS will not be increased.

Thus, the present money available in the Interest Suspense Account is deficit by about Rs 927.15 crore to meet the cost liability of increase in interest rate to 9.5 per cent. It is the responsibility of the Government to meet such a huge deficit in the Provident Fund.

Any negligence to manage the fund effectively will result in a critical situation, like the one faced by the UTI recently.

C. Ramesh

Keeramangalam (TN)

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