Date:28/01/2007 URL: http://www.thehindu.com/2007/01/28/stories/2007012803670800.htm

National

Decision on EPF interest rate deferred

Special Correspondent

EPFO board will not put subscribers' money in stock market

Trade unions resisting cut in interest rate

The next meeting of CBT by March

NEW DELHI : The Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) on Saturday deferred a decision on the rate of interest for EPF contributions for the current financial year.

The board, however, decided not to invest five per cent of the four crore subscribers' money in the stock market. This proposal had been made by the Finance Ministry under its revised investment pattern. But trade unions said the employees' hard-earned money, however small, should not be put at risk.

Talking to reporters, Minister of State for Labour and Employment (Independent charge) and board chairman Oscar Fernandes said a decision on fixing the EPF interest rate was postponed till the next meeting by March, as he needed more time to discuss with Finance Minister P. Chidambaram the issue of subsidy to meet the requirement for additional funds. He had already held one meeting with Mr. Chidambaram and would have another round of talks on how to generate funds.

``The rate of interest will depend on how much money we have in our coffers,'' Mr. Fernandes said to a question.

The board members reiterated their proposal that the EPFO be permitted to invest in the National Savings Certificates and Post Office Termed Deposit Receipts (TDRs). It permitted TDRs with private banks, subject to a limit of five per cent of the deposit base.

The board had fixed the EPF interest rate for 2005-2006 at 8.5 per cent, one per cent less than for the previous year. However, going by the returns, the EPFO can afford afford only eight per cent for 2006-07 and this payment will leave it with a small surplus (Rs. 10 crore)but trade unions are resisting any cut in the interest rate.

The organisation will have a Rs. 450-crore deficit if it retains the existing rate, according to EPFO figures. D.L.Sachdeva, secretary, All-India Trade Union Congress, said trade union representatives sought a meeting with the Prime Minister. The deadlock persisted because the EPFO was insisting that it was short of funds while employees' representatives were of the view that there was enough money to pay a higher interest.