Trade union representatives in the Central Board of Trustees of the Employee Provident Fund Organisation (EPFO) are considering reverting to their original demand of 8.95 per cent interest on EPF for the year 2015-16. This would be a full 25 basis points more than the 8.7 per cent cleared by the Finance Ministry on EPFO balances and also slightly more than than the 8.8 per cent cleared by the CBT earlier.
The central trade unions have been peeved at the Finance Minitry’s decision to clear a lower interest rate that what the CBT had recommended.
“We are considering pressing for our original demand of 8.95 per cent interest rate now that Finance Ministry has cleared a lower interest rate than what was cleared by CBT,” M Jagadishwara Rao, All India General Secretary, Bharatiya Mazdoor Sangh (BMS) and CBT member, told FeMoney.
Rao pointed out that Finance, Audit and Investment Committee (FAIC) of the CBT had originally suggested interest rate of 8.95 per cent. However, with the Labour Ministry and employers’ representative wanting a lower interest rate, a figure of 8.8 per cent was finally arrived at which was forwarded to the Finance Ministry for its clearance. “The matter has to come before the CBT once again,” Rao said.
Labour Minister Bandaru Dattatreya had on Monday informed the Lok Sabha that the Finance Ministry has agreed to an interest rate of 8.7 per cent for 2015-16. “The (EPFO’s apex decision-making body) CBT, at its meeting held in February 2016, has proposed an interim rate of interest at 8.8 per cent to be credited to the accounts of Employees’ Provident Fund subscribers for 2015-16. The Ministry of Finance has, however, ratified an interest rate of 8.7 per cent,” Dattatreya told the Lok Sabha through a written reply.
Vrijesh Upadhaya, National Secretary, BMS, pointed out that 8.95 per cent is a feasible interest rate for EPF for 2015-16. “Even at 8.95 per cent there would be a surplus of Rs 100 crore from the income generated by the fund after distribution of interest,” Upadhyay said.
He pointed out that it was wrong on the part of the Finance Ministry to reduce the interest rate. “The Government is not funding anything and we pay interest from the surplus generate by the fund from its investments,” Upadhyay.
A K Padmanabhan, President, Centre for Indian Trade Unions (CITU) said that an increase in EPF interest rate from the original 8.8 per cent suggested by CBT was possible. “The 8.8 per cent interest rate suggested by CBT was only provisional. There is scope for a little increase. There was no need for the Finance Ministry to lower the interest rate to 8.7 per cent,” Padmanabhan said.