The 4.7 crore
EPFO subscribers were left guessing during the year on continuance of 9.5 per cent interest rate for this fiscal, with the retirement fund body, in an unprecedented development, deciding to refer it to the
finance ministry for a final decision.
Despite intense deliberations during the year, the Employees' Provident Fund Organisation's (EPFO) apex decision making body, Central Board of Trustees (CBT), headed by the Labour Minister, failed to arrive at a conclusion on the issue.
The EPFO trustees took up the issue for a final decision on the rate of return for its subscribers at a meeting held this month.
It has provided three different alternative rates to the Finance Ministry for consideration, including its own recommendation of 8.25 per cent, 9.5 per cent as demanded by the unionists and employer's prescribed rate of 8.5 per cent for current fiscal.
"There are different views that emerged on the issue of rate of interest to be paid this fiscal. We will send the viewpoints of the EPFO, unionists and employers' representatives to Finance Ministry for a decision," said Labour Minister Mallikarjun Kharge.
As per the practice, the EPFO, which is an autonomous body, decides the interest rate on provident fund deposits for every financial year in advance on the basis of income projection and then seeks finance ministry's concurrence.
The EPFO's way of handling the issue invited sharp reaction from the unionists with Hind Mazdoor Sabha Secretary A D Nagpal, who is also a trustee, saying: "This is unfortunate. It has happened for the first time".
Similar views were expressed by another trustee and All India Trade Union Congress Secretary D L Sachdev who said CBT should have taken a decision on the matter.
The CBT takes the final call on the issue on the basis of the recommendations of its advisory body Finance and Investment (FIC) and sends its decision to the finance ministry for its concurrence.
Interestingly, even the FIC could not give a firm recommendation and reported its unionists members' reservations on the issue.
However, it pointed out in its recommendations to the CBT that providing 8.25 per cent rate for the current fiscal would result in a deficit of Rs 24 lakh which would further swell to Rs 526.44 crore at 8.5 per cent.
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