The Central Board of Trustees of Employees' Provident Fund on Saturday deferred its decision on the interest rate to be paid to subscribers of the fund for 2006-07 (Apr-Mar).
"No decision has been taken on EPF interest rate, as further talks with labour representatives and finance ministry are underway," Union Minister of Labour and Employment Minister Oscar Fernandes told reporters on Saturday afternoon.
Fernandes said the EPF board unanimously rejected a proposal to invest 5 per cent net accretion in the fund in stock market. This is the third meeting of the trustees to decide on the interest rate to be paid out for the current financial year. The trustees will again meet in February end to decide on the interest rate, Fernandes said. He added that the Board has also not agreed to invest in equities.
DL Sachdeva of the CPI-affiliated All India Trade Union Congress said that no decision was reached on the interest because of differences of opinion on the issue. "Employees' representatives and trade unions are not in favour of decreasing the interest rate or investing the EPF corpus in equity and share markets," Sachdeva said.
There are sharp differences between the trustees, comprising representatives of trade unions, government officials and employers on the interest rate. EPF's investment panel has recommended an interest rate of 8 per cent for the current financial year. However, trade unions are demanding 9 per cent.
EPF had paid 8.5 per cent interest rate to its subscribers last financial year. EPF is India's largest non-government provident fund with a corpus of about Rs 900 billion. About 60 per cent of the total EPF corpus is invested in Special Deposit Scheme, which earns an interest of 8 per cent.
Other provident funds in the country — like General Provident Fund and Public Provident Fund — pay an interest rate of 8 per cent to their subscribers.
According to the investment panel of EPF, the fund will earn a surplus of Rs 102.5 million at 8 per cent interest. However, there will be a deficit of Rs 5 billion if the interest rate is kept unchanged at 8.5 per cent.
Email Sutirtho Patranobis: sutirthopatranobis @hindustantimes.com