M A I N   N E W S

Cut in EPF interest rate recommended
Tribune News Service and Agencies

New Delhi, May 22
The sub-committee of Employees Provident Fund Organisation (EPFO) today recommended 0.5 per cent cut in the interest rate on economic consideration. It would have a direct bearing on over 24 million employees.

“We have recommended 8-9 per cent interest of EPF (from the present 9.5 per cent)”, EPFO’s Finance and Investment sub-committee Chairman and Additional Secretary Baleshwar Rai told reporters after the meeting.

“The quantum of revised rate of interest will be decided at its May 31 meeting,’’ EPF Central Commissioner Ajay Singh said after the meeting.

The sub-committee at its meeting said that the present rate of 9.5 per cent interest on EPF for 2003-04 was not viable and suggested a range of 8-9 per cent. Any reduction in EPF rate would affect more than 24 million employees, whose income would be reduced to the extent of decrease in the interest rate.

The recommendation of the Finance and Investment Committee of the country’s largest pension fund was in line with the Finance Ministry’s proposal to reduce the present ‘unsustainable’ 9.5 per cent.

‘’The EPF panel has calculated the earnings and recommended a range indicating the surplus/deficit at different rate of interests — 8, 8.5 and 9 per cent,’’ Mr Ajay Singh said.

Mr Ajay Singh said the committee had evaluated the projected income and liability of the fund on the basis of various interest rate slabs.

The total earnings as per existing pattern (9.5 per cent) of investment was Rs 5,714.05 crore, and at 8 per cent interest rate the total liability would be Rs 5,172 crore, leaving a surplus of Rs 541 crore, the committee said.

At 8.5 per cent, the Central Board of Trustees (CBT) would be faced with the liability of Rs 5,495 crore, leaving a surplus of Rs 218 crore, and at 9 per cent rate the liability would be Rs 5819 crore, resulting in deficit of Rs 105 crore, it said.

The recommendations 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.

The sub-committee recommended cut in interest rate despite opposition by Union Labour Minister, Mr Sahib Singh Verma, and others.