EPF rates virtually retained at 9.5%

Faced with obvious political pressures, the government on Saturday decided to virtually retain the 9.5 per cent return on employees providen...

Faced with obvious political pressures, the government on Saturday decided to virtually retain the 9.5 per cent return on employees provident fund for this financial year.

Though the central board of trustees of the EPFO decided to cut the rate by 0.5 per cent to 9.0 per cent, as suggested by the CBT’s finance and investment sub-committee, it approved a golden jubilee bonus of 0.5 per cent to effectively retain 9.5 per cent for the current year. But this bonus is only for the compulsory category of the PF.

The twin decisions for cutting the interest rate as also giving bonus were taken at a meeting, chaired by Labour Minister Sahib Singh Verma, who is also the CBT chairman. “We will be effectively giving 9.5 per cent on EPF in 2003-04,” Verma said, adding that the fund would have surplus of over Rs 25 crore even after giving 9 per cent.

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What is surprising is that the sub-committee had earlier projected a deficit of around Rs 100 crore at the interest rate of 9 per cent. However, when asked Verma said that only on Friday the CBT got the clarification from RBI that an additional Rs 120 crore had been accrued to its special deposit scheme account.

For the bonus 0.5 per cent, the additional liability would be around Rs 500 crore and would be met from the contingency fund, which had accrued to Rs 2,000 crore in the last five years.

However, the finance ministry would be consulted again on the decision of the CBT and a final decision would be taken by the government only after the approval of the finance ministry, sources in CBT added. Asked whether finance minister had been consulted, Verma said Jaswant Singh had informed him that the EPFO could take any decision which was sustainable.

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