In an unprecedented move,retirement fund body EPFO's trustees today failed to decide the interest rate for its over 4.7 crore subscribers for 2011-12 following sharp differences among them on the issue and have sought Finance Ministry's intervention. The EPFO will ask the Finance Ministry to finalise the rate of interest on provident fund deposits from the three different rates suggested by EPFO officials,trade unionist and employers' representatives,said Labour Minister Mallikarjun Kharge after the meeting of trustees. While the EPFO has suggested payment of interest at the rate of 8.25 per cent for 2011-12,the trade union members insisted that it should be 9.5 per cent. The representatives of employers wanted the interest rate to be fixed at 8.5 per cent. The EPFO paid 9.5 per cent interest in 2010-11. As per the practice,the EPFO's apex decision making body the Central Board of Trustees (CBT) decides interest rate on the basis of income projections and seek Finance Ministry's concurrence before implementing that. "There are different views emerged on the issue of rate of interest to be paid this fiscal. We will send the view points of the EPFO,unionists and employers' representatives to Finance Ministry for a decision," said Kharge,who heads the CBT. "This is for the first time that the final decision on the rate of interest will be taken by the Finance Ministry rather by CBT which is an autonomous body. This is unfortunate," Hind Mazdoor Sabha Secretary A D Nagpal said. Nagpal,a CBT member,said,"CBT should have recommended single rate of interest,9.5 per cent as suggested by employees' representatives." Another trustee and Secretary of All India Trade Union Congress D L Sachdev expressed similar views about CBT asking Finance Ministry to decide the interest rate. Making a case for payment of 9.5 per cent interest,the trade union members argued that the EPFO cannot pay less than 8.6 per cent interest,the rate offered by the government under the Public Provident Fund (PPF) scheme. The EPFO's advisory body Finance and Investment Committee (FIC) had suggested payment of 8.25 per cent interest for 2011-12 as it would leave a deficit of a mere Rs 24 lakh. It had further pointed out that an 8.5 per cent rate of return would translate into a deficit of Rs 526.44 crore. The trade unionists as well as employers' representatives suggested that if the estimation error is factored in properly,the EPFO could spare around Rs 400 crore,which would be sufficient to pay an additional 0.25 per cent over the projected 8.25 per cent rate of return this fiscal. Kharge said,"The employers' representatives suggested to pay 8.5 per cent rate of interest for this fiscal using some savings from estimation error." The unionists also demanded for for passing on the interest income on inoperative accounts,on which EPFO stopped payment of interest from April 1,2011,to active subscribers. Inoperative accounts are those accounts that have not received any contribution for 36 months or more. About Rs 15,000 crore lying in these accounts has been invested and is yielding returns,it was pointed out. However,the minister said that it could not be done as actual income assessment from those account will possible after end of this fiscal. The trustees also deferred the decision on the issue of fixing minimum pension at Rs 1,000 per month for its subscribers and issuing contribution cards similar to bank passbook to its members.
