The Hindu : Front Page : EPF rate : it is 9.5% for 2004-05

Online edition of India's National Newspaper
Sunday, May 29, 2005

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EPF rate : it is 9.5% for 2004-05

Staff Correspondent

The consequent Rs. 716.07-crore deficit to be met from the Special Reserve Fund

NEW DELHI: The Employees Provident Fund (EPF) Board has recommended 9.5 per cent rate of interest on the EPF accumulations for its 40 million subscribers for the year 2004-05. Announcing this at the end of a five-hour-long special meeting of the Central Board of Trustees (CBT) of the EPF Organisation, Union Labour Minister K. Chandrasekhar Rao said the deficit of Rs. 716.07 crores as a result of the decision, would be met from the Rs. 950-crore Special Reserve Fund.

The CBT, at its 169th meeting, held last year on July 13, 20 and August 9, had recommended 8.5 per cent as the interim rate of interest on EPF accumulations for 2004-05 but said that the final rate would be recommended after taking into account the actual interest income at the end of the financial year.

Union Finance Minister P. Chidambaram announced in February on behalf of the Prime Minister that the Government was committed to giving 9.5 per cent interest to the EPF subscribers but ruled out any bail-out package for the EPFO when the Labour Ministry said that it was not in a position to give more than 8.5 per cent to the subscribers.

With Saturday's recommendation, which has to be ratified by the Finance Ministry and notified by the Labour Ministry, the interest rates for 2002-03, 2003-04 and 2004-05 have been fixed at 9.5 per cent. The notification for 2002-03 and 2003-04 interest rates has already been issued.

The payment of interest to EPF subscribers at 9.5 per cent is expected to be Rs. 6,885.05 crores. The earnings have gone up to Rs. 6,168.98 crores on the actual income as on March 31, 2005 as against the projected income of Rs. 5,919 crores.

While the trade unions have welcomed the decision , they have condemned the move to dig into the Reserve Fund.

The corpus of the EPF was Rs. 79.764 crores as on March 31, 2005 of which 65.31 per cent is in the Special Deposit Scheme, 14.02 per cent in public sector/ financial institutions, 11.52 per cent in Central Government securities, 8.67 per cent in State government loans and 0.48 per cent in government guaranteed securities.

The CBT also considered the report of its sub-committee on the "Re-inventing EPF - India" project and decided to continue with the project with simplification of allotment procedures for issuing National Social Security Number.

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