New Delhi: The board of trustees of the Employees’ Provident Fund Organisation (EPFO) has agreed on Monday to pay subscribers 8.5% on their provident fund deposits for the year 2006-07.
The decision comes days after an internal committee of EPFO claimed to have discovered hundreds of crores of rupees in an interest suspense account. If this money had not been discovered, the board would have had to restrict payout at 8%.
“Amid protests by some trade union representatives, it has been decided to pay 8.5% interest rate on provident fund,” labour and employment minister Oscar Fernandes said after a three-hour meeting of the Central Board of Trustees (CBT) of the fund.
Trade union representatives on the board said that the 8.5% rate is 1% lower than they expected. They also said that the internal committee that has now found the money to pay 8.5% interest had examined the same accounts in November 2006 and declared that EPFO could only pay 8% interest.
“I have told the government that no amount of accounting jugglery will sort out the funds crunch in the EPFO,” said W.R. Varada Rajan, secretary, Centre of Indian Trade Unions (Citu), who is on the CBT. This year’s “find” will hurt subscribers next year, he said, indicating that there could be a shortfall for next year’s interest payment.
Fernandes, who heads the CBT, could not be reached for comment on the availability of funds.
The internal committee headed by Allampalli Venkataram of the Bharatiya Mazdoor Sangh, a prominent trade union, has claimed that about Rs.590 crore of surplus has been found in the interest suspense account and special reserve fund. The government had earlier claimed
Significantly, the same committee, in a November 21 report had concluded that surplus funds were not available. “Interest on subscribers accounts is given only by means of book entry and no actual impact would be felt at present if higher than 8% is permitted,” it had then said. However, it had warned that doing so and paying more than the fund’s earnings would “help some present subscribers but later subscribers will suffer if huge deficits are accumulated year after year.”