Mumbai, Feb. 4
THE Employees Provident Fund board will have to dip into its reserve to meet the gap in paying interest to subscribers, despite the interest rate being reduced to 8.5 per cent, said Mr A. Vishwanathan, Commissioner, Central Provident Fund Commissioner.
In January 2006, the Government had reduced the interest rate by one percentage point from 9.5 per cent on the recommendation by the Central Board of Trustees of the EPF for this fiscal.
Mr Vishwanathan said, "There will be a gap in the amount we make on our investments and the interest we have to pay EPF subscribers. But we can meet it by drawing from the reserves. There will be no deficit."
He was speaking to newspersons at the sidelines of a seminar on pension fund initiatives in India. The EPF is also launching a massive drive to bring more people under it, Mr Vishwanathan said. The national average gap between those people covered by EPF and those who are not is 41 per cent and in Western India, it between 43 per cent and 72 per cent, according to a survey by the Asian Development Bank.
On allowing PF to invest in equity, Mr Vishwanathan said the Central Board of Taxes has to take a view on it. As per the new investment pattern, 5 per cent of the funds can be invested in equities.