The finance ministry has announced an interest rate of 8.7% for the subscribers of employees’ provident fund (EPF) for 2015-16, 10 percentage points lower than the rate prescribed by the EPF Organisation’s Central Board of Trustees (CBT). The move has evoked strong protest from trade unions.
“The CBT, at its meeting held in February 2016, had proposed an interim rate of interest at 8.8% to be credited to the accounts of EPF subscribers for 2015-16. The ministry of finance has, however, ratified an interest rate of 8.7%,” labour minister Bandaru Dattatreya said in a written reply to the Lok Sabha on Monday.
EPFO had doled out 8.75% interest in 2013-14 and 2014-15. It had paid 8.5% in 2012-13 and 8.25% in 2011-12. As per the existing practice, the CBT recommends the rate of interest to be accrued to the subscribers — around five crore now — and the finance ministry ratifies the rate for a particular year. The lowering of the rate, as suggested by the CBT, by the finance ministry is perhaps unprecedented.
CTUs, which have earlier forced the government to abort plans to tax EPF and withdrawals, have upped the ante against the finance ministry’s attempt to “infringe upon the CBT and the EPFO”.
“The reduction of the rate is against the rights of the CBT and the EPFO. The finance ministry’s attack on the organisation had started in the Budget and it is still continuing. This is a very serious attack. We will go for a nationwide stir against the government after discussions with other central trade unions,” CITU president A K Padmanabhan said.
EPFO rewards its subscribers from the returns it earned from its investments without taking any government help. According to an earlier estimate, EPFO would have a R100-crore surplus even after paying up to 8.95% interest for the 2015-16 fiscal.
The government is planning to bring in a comprehensive amendment to the Employee’s Provident Funds and Miscellaneous Provisions (EPF& MP) Act, 1952, with the proposal to reduce the threshold limit for the coverage from 20 to 10 employees under the Act.