The Hindu Business Line : Left unions to press for 9.5% EPF rate

Prior to the July 30 meeting of the Central Board of Trustees (CBT) to decide on the interest rate for 2005-06, Left-affiliated unions have made it clear that they will ask for a 9.5 per cent rate for the current year too.

Incidentally, the Finance Ministry has, till date, not notified the 9.5 per cent interest for 2004-05, which was announced by the Finance Minister, Mr P. Chidambaram, after a meeting with the Prime Minister, Dr Manmohan Singh. The CBT also made its recommendation accordingly in May this year and later decided to dip into Employees' Provident Fund Organisation (EPFO) reserves for the payout since the Finance Ministry declined to make any budgetary allocation for it.

According to the Left unions, Mr Chidambaram's refusal to bridge the deficit between the EPFO's interest earnings and its interest liabilities for fiscal 2004-05 was violation of a Government decision.

Talking to Business Line, the CITU President, Mr M.K. Pandhe, said "The Prime Minister had taken the decision to pay 9.5 per cent interest. How is this that Mr Chidambaram refused to give the money? The EPFO had to dip into its reserve funds for paying last fiscal's interest to its subscribers. Moreover, the Finance Ministry has still not notified the rate."

According to the CITU President, this year too, the unions are going to insist that the rate be maintained at 9.5 per cent. He said earlier too, the interest rate in provident fund deposits was fixed with continuity and not every year. "Earlier it was not the practice that the CBT of the EPFO would recommend a specific rate of interest for a particular year. It is now that this is happening," he said.

He admitted that the EPFO was not in a position to pay more than 8 per cent interest for the current fiscal. But as per the existing provisions, it should be paying 9.5 per cent. The Government would have to make good the shortfall for the two consecutive financial years.

The EPFO board is meeting at the end of this month to consider several issues, including interest and retirement age along with problems in the pension scheme that the organisation runs.

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