Close to nine crore inoperative provident fund accounts with the Employees’ Provident Fund Organisation (EPFO), where no transaction has taken place for the last three years, will start receiving interest again with effect from April 1. Since April 1, 2011, the government (then UPA) had stopped payment of interest on such accounts, labour minister Bandaru Dattatreya said on Tuesday.
Chairing a meeting of the Central Board of Trustees’ (CBT) — the apex decision-making body of the retirement fund organisation —Dattatreya said the decision to pay interest on inoperative accounts has been taken keeping in mind the interest of the workers. The nine crore inoperative accounts have a total deposits of around `32,000 crore. Only four crore EPFO accounts are operative now.
“The UPA government stopped interest on inoperative accounts. Now, we have taken a pro-worker decision. The UPA government, which was claiming to be pro-worker, had stopped the interest on inoperative accounts. Now, we have decided to credit interest in the inoperative accounts. There will not be any inoperative accounts,” he said.
The interest would be paid on prospective basis. For the current year, EPFO has proposed to pay 8.8% rate of interest on provident funds for the current fiscal, up from 8.75% in the last fiscal.
The finance ministry, however, is yet to notify the rate. EPFO provides interest to its subscribers from its earnings on formal sector workers’ fund without any assistance from the government.
Meanwhile, labour secretary Shankar Agarwal said with the recent enhancement in the proportion of incremental investments with the EPFO to up to 65% in government securities from 50% earlier, the share in investments in other instruments will come down.
Out of its incremental deposits, EPFO used to invest up to 5% in exchange-trade funds, up to 50% in government securities and the remaining in bonds.
The CBT has also given its in-principal approval for restructuring of the EPFO. This would benefit over 20,000 employees of the organisation, who were waiting for their due promotions for the last 19 years.
“We have formed an implementation and anomalies committee, which will look into the grievances of employees also. The implementation of the scheme will be started within one month and go very fast,” the minister said.
The committee would be headed by Central Provident Fund Commissioner.