EPFO decision deferred, meeting on December 7

New Delhi, Nov 21 | Updated: Nov 22 2005, 05:30am hrs
The board of trustees of the Employees Provident Fund (EPF) which met here on Monday failed to arrive at a consensus on the interest rate for fiscal 2005-06. With trade unions pitching for a rate of 9.5%, the board deferred the decision till December 7 when it will meet again to discuss the issue.

Speaking to mediapersons after the meeting, union minister of labour and employment K Chandra Shekhar Rao said, Since there was no agreement on the interest rate on the EPFO, the discussion has been inconclusive.

Whether the government will be able to pay an interest rate of 9.5% will depend on the financial position and the current years income of the EPFO, the minister said. The labour ministry would take up the matter with the Prime Minister soon, he added.

Trade unions cutting across party lines have asked the government to enhance the interest rate on the special deposit scheme (SDS) as well as on the interest rate on government securities. The current rate of interest on the EPF should not be year-specific and should continue till the end of the UPA regime, said Citus WR Varadarajan.

The trade union leaders said that they were ready to meet the PM on the issue, as ball was now in his court.

As the government persisted with the administered rate of interest of interest at 8%, and has resorted to issuing government bonds at interest rates below that rate, the yield on the investments of the EPF had been falling. Trade union leaders feel that reduction in interest rates on these deposits would hit workers hard.