EPFO trustees seek FinMin intervention to fix interest rate

INTERVIEW - EPFO aims at paying 8.5 pct interest for FY10

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.

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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.

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"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." MORE