Over 4.7 crore (47 million) employees are likely to get an interest of 8.5 per cent in 2010-11 on their provident fund deposits of about Rs 2.5 lakh crore (Rs 2.5 trillion), a return authorities have been giving for the past five years.
The decision is likely to be taken on Friday at the meeting of the Central Board of Trustees (CBT), the apex decision making body of the Employees Provident Fund Organisation (FPFO), turning down the trade unions’ demand for 8.75 per cent as it would result in huge deficit.
The EPFO, which has a corpus of about Rs 2.5 lakh crore, will have a surplus of Rs 15.26 crore (Rs 152.6 million) after paying an interest of 8.5 per cent. However, the payment of 8.75 per cent interest, as is being demanded by trade unions, will leave it with a deficit of Rs 426.23 crore (Rs 4.262 billion).
The Finance and Investment Committee of the EPFO had earlier recommended 8.5 per cent interest rate for the current fiscal for which a final decision will have to be taken by CBT, a body headed by Labour and Employment Minister Mallikarjun Kharge.
The CBT will also take a view on raising the benefit from Rs 60,000 to Rs 100,000 under the Employees Deposit-Linked Insurance (EDLI) Scheme for EPFO subscribers in case he/she dies before superannuation.
The labour ministry had already accepted a proposal to raise the ceiling under the EDIL.
On raising the interest limit in PF deposit, an official in the labour and employment ministry said the FIC in its meeting held in February this year had firmed up its view to maintain 8.5 per cent interest rate on deposits for 2010-11, despite opposition from trade union representatives.
Trade unions had been demanding an interest of 8.75 per cent, which the committee had objected, saying it would leave a huge deficit in EPFO’s fund.
“Since increasing the rate to 8.75 per cent for next fiscal would result in a huge deficit of Rs 426.53 crore, the FIC had decided to pay 8.5 per cent for the sixth year in a row,” sources had then said.
The unions had also been demanding for long to raise benefit under EDLI scheme as payment of claims from its corpus is much less than the receipts.
The corpus under the scheme has risen to Rs 7,457.69 crore (Rs 74.577 billion) in 2008-09 from Rs 7,089.29 crore (Rs 70.893 billion) in the previous fiscal
on account on rising contribution. The amount given towards settlement, however, has remained constant at Rs 48 crore (Rs 480 million) during these three years.
The meeting may also consider raising wage ceiling from the existing Rs 65,00 to Rs 15,000 to bring more employees under the EPF scheme and help them avail provident fund benefits.