EPF Panel Favours 0.5% Cut In Interest Rate

New Delhi, May 22: | Updated: May 23 2003, 05:30am hrs
Despite stiff opposition from labour minister Sahib Singh Verma, a sub-committee of the Employees Provident Fund Organisation on Thursday recommended at least a 0.5 per cent cut in interest rate on EPF from the existing 9.5 per cent.

We have recommended 8-9 per cent interest on EPF (from the present 9.5 per cent), EPFOs finance and investment sub-committee chairman and additional secretary Baleshwar Rai told the press after the meet.

The recommendation of the sub-committee of central board of trustees of EPFO, comes in the wake of 1 per cent cut in interest rates to 8 per cent in special deposits scheme, which comprise over 80 per cent of the Rs 1,40,000 crore EPFO corpus and a general lowering of bank rates. The meeting took into consideration various interest slabs and calculated the surplus and deficit on its interest suspense account accordingly.

The sub-committee found that a marginal 0.5 per cent cut to 9.0 per cent interest rate would get the trustees into problems with a deficit of Rs 105.18 crore since the liabilities would be Rs 5,819.23 crore and income of Rs 5,714.05 crore.

If the trustees had to pay only 8.5 per cent (which means 1 per cent reduction), then the EPFO cab earn a suplus of Rs 218.98 crore as the liabilities will be Rs 5495.94 crore with the same income of Rs 5,714.05 crore.

The highest surplus of Rs 541.4 crore will accrue to the EPFO if it pays only 8.0 per cent (or 1.5 per cent cut from the present rate), as the laibilities will be Rs 5,172.65 crore and the income being Rs 5,714.05 crore.

PTI