Govt rolls back decision on EPF rate, fixes it at 8.8%
Finmin yields to pressure from trade unions protesting rate of 8.7%
THE finance ministry has yielded to the pressure from trade unions by agreeing to notify soon 8.8% rate of interest on the employees’ provident fund (EPF) deposits for 2015-16.
The move would bring cheers to EPF Organisation’s around 5 lakh active subscribers and central trade unions who had denounced the finance ministry’s decision to ratify the rate at 8.7%, despite the Central Board of Trustee’s (CBT) recommending 8.8%.
A seemingly elated labour and employment minister Bandaru Dattatreya said, “I am happy that the finance ministry has agreed to 8.8% rate of interest for 2015-16. The rates will be notified soon.”
This would be third roll- back by the finance ministry in matters related to EPFO in two months under the protest of the trade unions. Recently, it had withdrawn a proposal to tax on EPF and another on barring withdrawal of employers’ contribution to the EPF.
At 8.8%, the returns would be the highest in three years. In the previous two fiscals, EPFO had doled out 8.75% rate of in- terest to its subscribers. Rates were, however, lower at 8.5% in 2012-13 and 8.25% in 2011-12. Generally, CBT recommends the rate of interest to be accrued to EPF subscribers and the finance ministry ratifies the rate for a particular year.
Justifying the 8.7% rate of interest, the finance ministry had earlier said that the retirement fund body would leave with a surplus of around R1,000 crore for the year 2015-16, lower than R1,604 crore surplus it had in 2014-15, had it doles out 8.7% rate of interest. If offered 8.8% returns, the surplus would get further squeezed to just R674 crore.
The labour ministry, on the other hand, were under tremendous pressure to stick to the CBT-recommended 8.8% rate from the trade unions including the RSS-affiliated Bharatiya Mazdoor Sangh (BMS). The labour minister is also the chairman of the CBT. Trade unions on Friday went on a nation-wide protest against the finance ministry’s decision.
BMS’ general secretary Virjesh Upadhyay thanked prime minister, finance minister and labour minister for “upholding the CBT decision on EPF interest rate.”
At 8.8%, the returns would be the highest in three years. In the previous two fiscals, EPFO had doled out 8.75% rate of interest to its subscribers