Employees may feel happy about the 9.5 per cent interest on provident fund (PF) deposits for 2010-11, but private companies are grumbling about the move. They have even expressed their inability to meet the obligation.

In a letter to the Union Labour Minister, Mr Mallikarjun Kharge, the umbrella organisation of private employers in India, the Employers Federation of India (EFI), has said, “We were hoping for positive consideration based on data presented by us in respect of exempted funds. To this date we have not received any communication from your ministry in response.”

Mr Sharad S. Patil, Secretary-General of EFI and Member, Central Board of Trustees of the Employees Provident Fund Organisation (EPFO), has sought an appointment with the Minister on the issue.

Since 2005-06, the EPFO had been paying 8.5 per cent interest on PF deposits. In September 2010, it recommended an increase to 9.5 per cent for 2010-11 after discovering Rs 1,731 crore in the interest suspense accounts.

It concluded that private companies would have no difficulty in paying 9.5 per cent

However, private employers have contested the EPFO's claim that exempted trusts had enough surplus funds to pay higher interest.

In a representation to the Labour Ministry, Mr Patil said that 95 per cent of the 42 trusts surveyed by EFI had expressed their inability to pay 9.5 per cent interest. This would mean that most of these trusts would have to seek funds from the companies to meet the shortfall.

If the survey results were extrapolated to all trusts, the interest deficit after the additional pay-out would be around Rs 908 crore, it added.

“It is totally unfair to penalise exempted funds by adding interest burden on the companies managing these,” the EFI said.

There are a total 2,755 exempted trusts in the country, according to the Ministry's annual report for 2008-09. In an exempted trust, the employer organisation manages its own PF fund and invests it through trusts formed by the companies.

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