Closer to Other Small Savings Plans
This is seen as a step towards bringing the rate closer to those offered by other small saving schemes. The finance ministry had last month reduced interest rate on small saving schemes including Public Provident Fund (PPF) scheme and Kisan Vikas Patra to 8.1% and 7.8%, respectively, from 8.7% in 2015-16.
“The CBT (Central Board of Trustees, EPFO’s apex decisionmaking body), at its meeting held in February 2016, has proposed an interim rate of interest at 8.8% to be credited to the accounts of Employees’ Provident Fund subscribers for 2015-16. The ministry of finance has, ho- wever, ratified an interest rate of 8.7%,” Labour Minister Bandaru Dattatreya on Monday said in a written reply to the Lok Sabha.
EPFO’s advisory body, Finance Audit and Investment Committee, had recommended that 8.95% rate of interest was feasible as it would leave a surplus of Rs 91 crore. According to its estimates, providing 9% rate of interest would have resulted in a deficit of Rs 102 crore. The organisation pays interest to its subscribers on the basis of returns it generates from its investments. The demand for 9% rate of interest for 2015-16 by the representatives of the employees notwithstanding, the CBT at its meeting on February 16 decided to provide an interim interest rate of 8.8% for the fiscal.
The central trade unions, including the RSS-backed Bharatiya Mazdoor Sangh, slammed the finance ministry’s decision. “BMS strongly condemns cut in EPF interest rate. We will hold nationwide demonstrations at EPF offices on April 27,” BMS General Secretary Vrijesh Upadhyay said.
DL Sachdeva, national secretary of the CPI-backed AITUC said, “This is undue interference from ministry of finance when the EPFO income justifies 8.9% and the board has approved 8.8%. All central trade unions will protest against this unilateral move.”