EPF interest rate reduced to 8.7%; fresh trouble brewing as unions threaten agitation

Trouble is brewing over the lowering of Employees Provident Fund interest rate to 8.7 per cent for 2015-16 by the Finance Ministry, with labour unions up in arms over the decision. The new rate was announced instead of 8.8 per cent recommended by the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation.

Labour representatives in CBT said they would approach the Ministry of Labour to request the Finance Ministry to have a relook at the issue and would resort to agitation if the move is not withdrawn.

Terming the move as ‘condemnable’ and an ‘unwarranted interference’ in the EPFO afairs, labour representatives in the CBT said that they would start widespread agitation against the move. “We strongly condemn the move. We will start an agitation on April 27 against the Finance Ministry’s decision,” Vrijesh Upadhaya, National Secretary, Bharatiya Mazdoor Sangh (BMS), and member, CBT, told FeMoney.

He pointed out that fixing the interest rate for EPF is the prerogative of the CBT and not the government. “CBT is an autonomous body. Moreover, the EPFO does not take a single paise from the government to pay interest on EPF corpus. It is paid through returns generated on employers’ and employees’ contribution by investing the money in different securities,” Upadhaya said.

DL Sacheva, CBT member and general secretary, All India Trade Union Congress said the Finance Ministry’s move is not acceptable to unions. “This is unwarranted interference by the Finance Ministry in the affairs of the CBT. Base on the income the interest rate to members could actually be higher than the 8.8 per cent proposed by the CBT. We agreed to the Labour Minister’s request to lower the rate in keeping with lower rates on other instruments. We will request Labour Ministry to ask the Finance Ministry to have a relook at the issue,” Sachdeval said.

In a written reply to the Lok Sabha on Monday Labour Minister Bandaru Dattatreya said 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 said.

AK Padmanabhan, president, Centre of Indian Trade Unions(CITU) and member CBT, said, “This move is part of a wider policy offensive by the government. The CBT was not even informed about the reduction in the interest rate. This was unwarranted and condemnable. We plan to go on a countrywide agitation.”

In keeping with the unions’ mood, M Jagadiswara Rao, All India Secretary, BMS, said that the unions would not accept the Finance Ministry’s decision. “We are not going to accept 8.7 per cent interest rate for EPF. The matter has to come to discussion at the CBT. We will press for a higher interest rate,” Rao told FeMoney.

Recently, EPFO was in news for its proposed withdrawal restrictions, which had met with strong opposition and had to be withdrawn by the Labour Ministry after violent protests in some cities in the country.