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Amidst apprehension of a reduction in the interest rate to be paid on provident fund accounts in the current financial year, the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) is slated to meet on June 24.
A senior labour ministry official told Business Standard the meeting is to decide on new fund managers. “It is too early to decide on the interest rate for 2011-12,” he said.
EPFO is in the process of appointing multiple fund managers for a three-year period beginning July 1, for managing its Rs 3 lakh crore corpus. The existing four fund managers — ICICI Pru, HSBC AMC, SBI and Reliance Capital — are among the 11 asset management companies (AMCs) in the race.
The seven new companies interested in managing EPFO funds include Kotak Securities, Securities Trading Corporation of India, UTI Securities and ICICI Securities. The EPFO had engaged the four AMCs from September 2008 to March 2011, to improve the yield on its investments for providing better returns on PF deposits to its 47.2 million subscribers.
Though the agenda for the June 24 CBT meeting is yet to be circulated, a member said some discussion on the interest rates was also possible, as EPFO was in the process of making projections for the likely yield this year, on the basis of which interest rates would be decided. The labour ministry official, however, said a final decision on the interest rate for 2011-12 would be taken only around November.
While the labour ministry has said it would push for a better interest rate this year, EPFO calculations indicate the rate for 2011-12 could at best be nine per cent as against 9.5 per cent in 2010-11.
The CBT member said the two pending issues to be also taken up in the meeting were recommendations of the expert committee on the pension scheme and amendment in the EPF Act to curb irregularities by companies in payment of PF contributions.
The measures for improving the pension scheme, recommended by a panel, includes a shift to market-linked returns and increase in the total pension contribution from 9.5 per cent at present to 14 per cent, he added.
The proposed amendment in the EPF Act is meant to address irregularities in wage payments by companies, to lower the EPF contribution.