Dashing all hopes of a higher return,the four-crore subscribers of the Employees Provident Fund Organisation (EPFO) may receive just 8.5 per cent interest on their PF deposits for the fiscal 2008-09 when the EPFO Central Board of Trustees (CBT) deliberates on the matter on Sunday.
At the meeting to be chaired by Labour Minister Oscar Fernades,the board is likely to decide on the rate of interest on investments,a matter which has been long pending. A senior Board member told The Sunday Express,The elections are around the corner. In such a situation,the board is unlikely to declare a lower rate of interest on PF. The rate of interest may be maintained at 8.5 per cent only the Board member said. PF subscribers got 8.5 per cent return on their deposits during 2007-08.
Earlier,the labour ministry had been pressing for a higher rate of return on Special Deposit Scheme (SDS) with the Finance Ministry. Fernandes had taken a delegation of the members of the Central Board of Trustees to Prime Minister Manmohan Singh on the issue. However,nothing much came of it,with the Finance Ministry deciding against any upward revision of SDS returns. Around 80 per cent of PF investments are parked in SDS.
Faced with prospects of a deficit of Rs 139 crore on 8.5 per cent rate,EPFO has so far not declared interest rate for 2008-09. As of last year,the SDS deposits fetched an 8 per cent return per annum. The returns on non-SDS investment in 2007-08 were 9.01 per cent and in the year-ago period,it stood at 8.7 per cent,informed an official.
SDS,launched in 1975,was seen as a safe haven by the EPFO till early 2000,since it assured risk-free high returns even at times when interest rates were dropping.