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No disagreement with finance ministry on 8.55% interest on EPF: Labour minister

The proposed rate of interest will be ratified by May or June as per convention, says Santosh Gangwar.

business Updated: Apr 15, 2018 12:16 IST
Press Trust of India
Press Trust of India
Press Trust of India, New Delhi
Labour minister,Santosh Gangwar,Employees’ Provident Fund Organisation
Union labour minister Santosh Kumar Gangwar. (PTIfile photo)

Labour minister Santosh Gangwar has said that there is no disagreement with the finance ministry on providing 8.55% rate of interest for 2017-18 to over five crore subscribers of retirement fund body EPFO.

The Employees’ Provident Fund Organisation’s apex decision making body Central Board Trustees (CBT) had decided to provide 8.55% rate of interest on EFF for last fiscal on February 21, 2018 and sent the proposal to the finance ministry for its concurrence.

“It is not that they have rejected our proposal (of 8.55% rate of interest on EPF deposits for 2017-18). They can give suggestion on our proposal, “ Gangwar told PTI.

“The proposed rate of interest will be ratified by May or June as per convention. There is no disagreement on the proposed interest rate. Had there been any disagreement, we would have got their view by now,” he added.

The minister was responding to the speculations that the finance ministry may not approve the 8.55% interest rate on EFF for 2017-18 which is even lower than the 8.65 provided for 2016-17.

After providing 8.55% interest for 2017-18, the EPFO would have a surplus of Rs 586 crore. The 8.55% rate of interest would be lowest rate in last five year for subscribers.

They got 8.8% in 2015-16 and 8.75% each in 2013-14 and 2014-15. In 2012-13, the EPFO had provided 8.5% rate of interest on EPF.

On enhancing minimum monthly pension under the Employees’ Pension Scheme 1995 run by the EPFO, Gangwar said: “There is no such proposal from the Labour Ministry. Government then (in 2014-15) paid around Rs 800 crore for minimum monthly pension of Rs 1,000 under the scheme.”

Central Trade Unions have been pressing for Rs 3,000 minimum monthly pension and have also demanded its indexing, linking it with inflation.

On enhancing investments in the exchange traded funds (ETFs), from 15% to 25% of investible deposits, the minister said that the finance ministry notified investment pattern provides for investment of 5 to 15% in equity or equity linked schemes by private provident funds.

The EPFO started investing in August 2015. In 2015-16, it invested 5% of its investible deposits which was subsequently increased to 10% 2016-17 and 15% in 2017-18.

The EPFO has invested Rs 41,967.51 crore in ETFs with return of 17.23% as on February 28, 2018. The body had sold ETFs worth Rs 2,500 crore in March this year.

First Published: Apr 15, 2018 12:16 IST