EPF Board Retains 8.5% Rate

Bowing to pressure from Left-backed trade unions, the Employees Provident Fund Board has agreed to continue paying 8.5 per cent interest rate to its nearly four crore subscribers for fiscal 2006-07.Amid protest by some trade union representatives, it has been decided to pay 8.5 per cent interest rate on provident fund, Labour Minister Oscar Fernandes said.

The decision to retain 8.5 per cent interest will put a burden of Rs 450 crore on the EPF fund.However, sources said that the deficit could be offset from a surplus of Rs 590 crore lying in the Interest Suspense Account, Contingency Reserve and Special Reserve Fund.The Board will submit its recommendations to the Finance Ministry, which is expected to notify the rate shortly.

Fernandes said the EPF had constituted a sub-committee to assess the Board''s finances. The report of the committee placed before the meeting for deliberation found that there would be a surplus of Rs 595 crore with the board.Even after paying 8.5 per cent interest rate, the fund would be having a surplus of Rs 83 crore. The EPF has a corpus of Rs 94,000 crore including pension fund. Referring to the demand of trade unions to pay higher interest rate, he stated that the board had fixed interest rate only for the previous year. Fernandes said the board also discussed the government''s suggestion to invest five per cent of the corpus in the stock market but no decision was taken. However, representatives of the Left-affiliated trade unions rejected the decision of the board, while demanding at least 9.5 per cent interest rate.