The Central Board of Trustees of the country’s largest retirement fund manager has questioned the finance ministry’s prerogative to approve and notify interest rates for the Employees’ Provident Fund (EPF).
The matter was taken up at the CBT’s meeting last Friday. “Many of the trustees asked why EPFO had to seek the finance ministry’s approval for fixing the interest rate on EPF deposits, as they were concerned by the low rate notified by the finance ministry in 2011-12,” said BN Rai, secretary, Bhartiya Mazdoor Sangh and a member of the board of trustees.
Many of the trade union members in the CBT have also suggested that while fixing the interest rate for 2012-13, North Block’s intervention should be minimum.
The CBT, headed by labour and employment minister Mallikarjun Kharge, is the apex decision making body of the EPFO (Employees’ Provident Fund Organisation). While it has the mandate to propose and forward an interest rate for EPF deposits for a financial year, it is up to the finance ministry to notify it.
Without a formal notification by the finance ministry, EPFO or any of the privately run PF trusts cannot credit the rate of interest in members’ accounts.
However, for the past two years, the rate of interest to be given to over 4.7 crore subscribers of the EPFO has been a hotly debated topic between the labour and finance ministries.
While North Block had argued against the 9.5 per cent interest rate proposed by the CBT for 2010-11, last fiscal it chose to notify an interest rate of 8.25 per cent, which was the lowest of the three alternatives of 9.5 per cent, 8.6 per cent and 8.25 per cent — forwarded by the Central Board of Trustees.