The Hindu Business Line : EPFO trustees meeting on Monday

The Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) is scheduled to meet on Monday to decide on the interest rate payable to its subscribers for the last fiscal (2006-07) and the current fiscal 2007-08.

According to indications available the trustees could make a recommendation for a cut in interest rate from 8.5 per cent (paid in 2005-06) to 8 per cent based on fund availability and 8.25 per cent for 2007-08.

The Minister for Labour, Mr Oscar Fernandes, who is also the CBT Chairman, has already communicated to the CBT members about the urgency to make its formal recommendations on a final rate for 2006-07 because the system demands that recommendations should be made during the year and it is already four months beyond the fiscal.

However, labour leaders who represent the employees on the board indicated that they would not agree for 8 per cent interest rate for 2005-06.

As per the rules, the EPFO would pay interest to its subscribers from its interest earnings. Earlier this year request for Central Government support had been rejected by the Finance Ministry.

Total Corpus

The EPFO has a total corpus of over Rs 1,40,000 crore, of which around Rs 84,258 crore is in the employees provident fund account, while the remaining amount is under the employees pension scheme. For 2006-07, EPFO’s income stood at Rs 7,372.67 crore.

If interest rate is fixed at 8 per cent then the pay out would amount to Rs 7,362.42 crore leaving a surplus of Rs 10.25 crore. In case of 8.25 per cent interest the pay out would be Rs 7,592 crore and create a deficit of Rs 219.82 crore. And if the last recommended rate of 8.5 is to be retained the pay out comes to Rs 7,822.57 crore leading to a deficit of Rs 449.90 crore.

“If no unanimous decision could be reached and a situation arises where the decision would have to be taken by voting we might even abstain from voting to register our protests,” said Mr D.L. Sachdev, Secretary of the All India Trade Union Congress (AITUC) and CBT member.

Mr Hasubhai Dave, President of the Bhartiya Mazdoor Sangh (BMS) and CBT member, however, feels that the rate for 2006-07 could be fixed at 8.25 per cent.

“Apart from the deposits with the Special Deposit Scheme in which the trust is getting only 8 per cent, in other State Government and Central Government deposits it is around 9 per cent on an average. Earlier also the EPFO has paid interest from its own funds and adjusted it later. So if the interest rate for both the years is fixed at 8.25 per cent the deficit of 2006-07 could be adjusted from the surplus of 2007-08,” he said.

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