EPF rate fixed at 8.5 per cent for 2006-07, govt shifts gear

New Delhi, July 23 (UNI) The interest rate on Employees Provident Fund (EPF) was today fixed at 8.5 per cent for 2006-07, with the meeting of the Central Board of Trustees of the pension fund witnessing the government shifting gear.

The decision was taken at a special meeting of the Central Board of Trustees (CBT) of EPF, presided over by Labour Minister Oscar Fernandes.

The Board left the interest rate on the pension fund unchanged at 8,5 per cent for 2006-07, but a decision regarding the interest rate for current fiscal is to be taken at the next meeting.

The Sub-Committee's Report created grounds for retaining the 8.5 per cent interest rate for 2006-07, despite the fact that the government had made out a case earlier for lowering this to eight per cent.

The central trade unions wanted the rate of interest to be hiked to 9.5 per cent, in view of the hardening of the interest rates generally.

Mr Fernandes in the last meeting had suggested that the interest rate on EPF be reduced to eight per cent for the year, but in the meeting this morning the Committee's Report came handy in retaining it at the earlier level.

At the meeting, which lasted for more than two hours, the CBT accepted the Report of its Sub-Committee (Venkatraman Committee) appointed to look into the accounts of Employees Provident Fund. It took a decison to meet the deficit of Rs 449.90 crore from the Interest Suspense Account. The expected interest income during 2006-07 would be Rs 7,372.67 crore, while the liability at 8.5 per cent interest rate would be Rs 7,822.57 crore.

Briefing newspersons after the meeting, Mr Fernandes said that according to the Sub-Committee report, there was an accumulated balance of Rs 347.78 crore in the Interest Suspense Account, Rs 185.69 crore in the Contingency Reserve Fund (CRF) also part of the Interest Suspense Account and Rs 56.69 crore in the Special Reserve Fund (Total Rs 590.16 crore).

After meeting the deficit of Rs. 449.90 crore, the EPF would be left with a surplus of about Rs. 83 Crore, while leaving aside Rs 56.69 crore in the Special Reserve Fund, Mr Fernandes said.

The meeting was attended by the representatives of the Employees, Employers and the Central and State governments.

The interest rate for 2007-08 on the EPF could not be decided as the accounts had not been finalised. It was, therefore, decided to keep the decision in this regard on hold till the next meeting.

A suggestion was also made that the Committee, which had gone into the period 2000-06 for identifying the surplus, look into the earlier period too. This could perhaps yield a larger surplus.

The Minister said he would take a decision in this regard later.

UNI