The Central Board of Trustees of EPFO on Tuesday took a decision to pay interest on dormant accounts from April 1, 2016. However, it could not take a decision on making this applicable retrospectively from April 1, 2011 till March 2016.
After its decision to pay interest on dormant accounts from April 1, 2016, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) is likely to consider payment of interest on dormant accounts from April 1, 2011 to March 31, 2016.
“The trade unions had demanded payment of interest on dormant accounts from April 1, 2011 itself. However, the government has deferred a decision on this and has applicable from April 1, 2016 onwards. We will take up the issue in the next meeting of the Central Board of Trustee (CBT),” D L Sachdeva, CBT Member representing All India Trade Union Congress (AITUC) told FeMoney.
The CBT on Monday took a decision to pay interest on dormant accounts from April 1, 2016. However, it could not take a decision on making this applicable retrospectively from April 1, 2011 till March 2016.
The UPA government had announced that no interest will be paid on dormant accounts with effect from April 1, 2011. Dormant accounts are those where no money has been credited for a period of 36 months.
Sachdeva said with nearly Rs 32,000 crore lying in 9 crore dormant accounts, a rough calculation of 8.5 per cent annual rate of interest, the unpaid interest since April 2011 works out to Rs 12,500 crore. It would be substantially larger if compounded annually. “All union representatives in CBT were unanimous that the interest should be credited in these accounts,” Sachdeva said. He said that they have pressed that these issues should be discussed in the finance and investment committee of the CBT after which it should be placed before the board.
Former, Central Provident Fund Commissioner (CPFC), A Vishwanathan, agreed that the government should pay interest on dormant accounts since April 1, 2011. “The original decision itself is questionable. Since the money is held in trust it is not good to hold back interest for the interim period. This is more so because EPF contribution is made by the subscriber to build a corpus which may be required at retirement or when one does not have a job or is unable to work,” Vishwanathan said.
He pointed out that EPFO was making gains on the investment and it was wrong not to reward subscribers. “EPFO is making gains on investment. It is morally dishonest not to pay the subscribers,” Vishwanathan, who headed EPFO at one time, said.