The Hindu Business Line : Decision on EPF interest rate deferred

After retirement, employees can get their dues in the form of gratuity, leave encashment, bonus, pension, if any, and EPF. If the rate of interest is revised, the interest amount consequent to the revision can be paid to them latter. Else, employees stand to lose interest on the amount already due.

Owing to political wrangling, the EPF board has postponed by two years any decision on the rate of interest. Retired government servants are paid whatever amount is due to them on the date of retirement. Any revisions in DA and leave encashment dues are paid later.

This procedure may be followed by private sector units too, to mitigate hardship to retired employees.

T. S. Sundareswaran, New Delhi

Interest rate fluctuations affect retired people more. Though the Government claims that inflation is under control, the prices at the retail level is high, affecting especially those dependant on interest income.

With more and more nuclear families and average age going up, the elderly are going to have a tough time. When crores of rupees going down the drain, some expenditure management will certainly help improve the interest rates. What is urgently required is a "social security policy". The Government will do well to consider the same.

Krithivasan, e-mail

The failure of the Government to decide on the interest rate for provident fund will affect more than two lakh people who retired during the current financial year. The rate of interest for provident fund was last revised in April 2006. . When the interest rate is not decided, the interim interest rate is paid at the previous year's rate.

Further, there is no point in prolonging the decision on interest rate. The EPFO should come to a reasonable understanding of the investment pattern at the earliest. A mid-way policy at least should be found.

A. Jacob Sahayam, Thiruvananthapuram

It is unfortunate that for the fourth time since November last, the Central Board of Trustees (CBT) of the EPFO could not arrive at a consensus on the rate of interest payable to the employees. The CBT does not seem to be concerned about the plight of the more than 2-lakh people who retired during the year.

The CBT could have at least settled the accounts of the retired employees based on the previous year's rate of interest, as was done in the last two years, and the balance adjusted after the announcement of the final rate of interest.

With the inflation rate going up, the banks are offering interest rates of 9-10 per cent. Some private banks are offering much higher rates. With additional taxation measures in the Budget, it may not be difficult for the Finance Minister to provide the required funds for the EPFO so as to declare a higher rate of interest for EPF.

The EPF board, on its part, must manage the fund as a good private mutual fund company in order to maximise the returns.

S. Nallasivan, Tirunelveli

The Government's action of postponing EPF interest rate disregards the principles of social security.

There should not be any financial burden for the Government if it continues to invest its funds in development projects that are capable of generating higher returns. If the decision could not be taken for some reason, the Government should grant an interim measure pending a final decision after arriving at a consensus.

T.R. Anandan, Coimbatore

Response to Sticklish Issue dated March 5.

Globalisation encourages BPOs, LPOs and KPOs, which helps increase the income of business leaders and investors, who in turn drive up inflation. And owing to free movement of capital, people park their funds where they get higher returns.

This leads to inflation not only in the US but in other countries as well. As inflation affects the middle and lower classes more, the central banks of the respective countries should intervene to control the liquidity till prices settle down.

T. S. Sundareswaran,

New Delhi

More Stories on : Social Security | Sticklish Issues

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Decision on EPF interest rate deferred

Can a CA firm publicise feats of its staff?

How to contain inflation

Statement of overhead recovery rates

Full-time vs part-time MBA

Sticklish Issues

Acquiring companies in UK: The legal obstacle course

Just Do IT

Number Crunch

Can gratuity be carried forward?

Focus on task at hand

Acts that intersperse