EPF Board defers decision on rate of interest
Sources said no decision has been taken in view of EC code of conduct for Goa assembly polls, reports Sutirtho Patranobis.delhi Updated: May 27, 2007 22:25 IST
The Employees Provident Board on Sunday night deferred, for the fifth time in less than a year, a decision on the rate of interest on provident fund for 2006-07 and 2007-08.
The Special Meeting of the EPF Central Board of Trustees (CBT) decided not to take a decision in view of Election Commission's model code of conductcoming into effect for Goa assembly polls. Next meeting of EPF Board on the rate of interest is likely to be held on July 2, sources said.
Sunday's meeting, held in the backdrop of strong protests against any cut in the rate of EPF, was chaired by Labour Minister Oscar Fernandes, also the board's chairman.
The finance and investment committee of the EPF Board in its 83rd meeting held in March 2006 had observed that only 8 per cent rate of interest was sustainable out of the income of the fund during 2006-07.
This was rejected by trade unions who opposed any cut in the present rate of 8.5 per cent.
The Board recently circulated an agenda note for the meeting among Board members, which include representatives from the employees, employers, Centre and state governments.
Trade union sources had said the agenda note highlighted the gains and losses that EPFO would make at particular rates of interest for two years, 2006-07 and 2007-08. The two possible rates of interest floated by the EPFO are 8 per cent for the first year and 8.25 per cent for 2007-08.
The gains and losses have been calculated according to the income and liabilities generated by the provident fund money. The money accumulated in the fund has largely been invested in central and state government securities and in the special deposit schemes.
"According to the calculations, for 2006-07, if the rate of interest is brought down to 8 per cent, the EPFO makes a surplus income of Rs 10.25 crore. Pegged at 8.25 per cent, the surplus would be transformed into a loss of Rs 219.82 crores. For 2007-08, an interest rate of 8.25 per cent would generate a surplus of Rs 3.54 crore. But at the interest rate of 8.5 per cent, losses would mount to Rs 263.78 crores," trade union sources said.
At the last meeting in March, all the central trade unions had opposed any cut in the interest rate. "The meeting had proved to be inconclusive. Labour Minister Oscar Fernandes had said that he would take our arguments to Prime Minister Manmohan Singh and Finance Minister P Chidambaram. But he did not get back to us after that," sources had said.
The trade union leader said that all trade unions are unanimous this time as well about not accepting a cut. "The Board can take any decision with majority support. But we will mark our dissent and then decide on the mode of agitation," he said.
First Published: May 27, 2007 20:47 IST