The Hindu Business Line : EPFO defers decision on raising additional funds

THE Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO) on Monday postponed a formal decision on the modalities of raising additional resources for paying 9.5 per cent interest on provident fund deposits for fiscal 2004-05.

The trustees, however, decided on appointing international consultancy firm Mercer Human Resources to suggest investment options to the CBT. The Labour Minister, Mr K. Chandrasekhar Rao, will now discuss the matter with the Prime Minister, Dr Manmohan Singh.

Mr Rao told CBT members at a meeting that after discussing the matter with the Prime Minister, he would present a roadmap in the next meeting of the CBT scheduled for March 20.

However, after the meeting, the Minister told reporters that the nitty-gritty of mobilising additional resources to bridge the shortfall between the EPFO's earnings and its interest liability would be taken up only at the next meeting in view of the model code of conduct in force because of the ongoing Assembly elections in some States.

"The Government will manage to pay the money. It is better that people stop worrying about it," he said. Earlier this month, the Finance Minister, Mr P. Chidambaram, had announced that the interest payable on EPF deposits would be 9.5 per cent for the current financial year. This would create a gap of Rs 927 crore between the EPFO's earnings and its interest liabilities for the current financial year.

"We have appointed Mercer Human Resource Consulting to suggest improvement in the pattern of investments," Mr Rao said.

The firm will submit its report on restructuring the organisation's investment pattern over the next 10 to 15 years. The focus areas of the report will include parking of funds in equities, postal deposits and National Savings Certificates (NSCs). The company will submit its report to the CBT in four months.

The board also took up the valuation report of the panel of actuaries on Employees Pension Scheme that had shown a deficit mainly due to the interest rate hike and the enhancement of monthly wage limit for eligibility from Rs 5,000 to Rs 6,500.

The board has also decided to constitute a five-member fact-finding committee to look into the feasibility of the EPFO's computerisation project. The board would constitute five CBT members, two from the trade unions, two from the employers and one from the Government.

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