Panel finds 145;surplus146; to retain 8.5 return on PF

After dithering over announcing the Employees8217; Provident Fund rate for 2006-07 for over 16 months, the UPA government has found an exit route that allows it to retain the PF rate at 8.5 per cent instead of the 8 per cent...

After dithering over announcing the Employees8217; Provident Fund rate for 2006-07 for over 16 months, the UPA government has found an exit route that allows it to retain the PF rate at 8.5 per cent instead of the 8 per cent payable according to the EPF8217;s earnings.

A sub-committee of the EPF Board auditing EPFO8217;s accounts to look for any surplus balances to fund the Rs 450 crore needed to maintain the EPF rate at 8.5 per cent, has managed to find Rs 590 crore8212;a sum that could allow the government to continue paying 8.5 per cent in 2007-8 as well, though earnings allow only a 8.25 per cent rate.

Union Minister of State with independent charge of Labour and Employment, Oscar Fernandes, is set to decide the rate when the EPF board meets on Monday to discuss the PF rate. The Board8217;s decision would be conveyed to the government for consideration and needs to be cleared by the Finance Ministry before it is notified.

The same audit sub-committee headed by Board member A Venkatram had furnished a report in November 2006 after examining audited figures since 1973-74, but found no accumulated surplus in the Interest Suspense Account where EPFO8217;s earnings are parked till the interest is credited to members. In fact, the committee had found a Rs 339.61 crore deficit in the account.

A day after the last meeting on May 27, where Fernandes had deferred a decision on the PF rate citing the Assembly elections in Goa, he held an informal meeting with the members of the audit panel and asked them to make one last 8220;endeavour8221; to find out if 8220;some amount is lying as accumulated surplus from earlier years8221; in the Interest Suspense Account, Contingency Reserve and Special Reserve Fund.

Examining the last five years8217; accounts and interest rate declarations with the help of EPFO, officials this time the committee was able to locate a surplus of Rs 590.16 crore under the three heads. The balance in the Special Reserve Fund, meant to pay the claims of employees whose employers have turned into defaulters, is down to just Rs 56.69 crore from a figure of Rs 978.13 crore in 2003-04. A bulk of the Rs 1,380 crore needed in the last three years to pay higher interest rates than warranted by EPF8217;s income, has been drawn from the SRF account.