EPFO will not revise interest rate downward: Government

Retirement fund body Employees' Provident Fund Organisation will not revise its interim interest rate of 8.8 per cent downward for the current financial year, Labour Minister Bandaru Dattatreya said on Friday.

"We will not revise it (interim interest rate) downwards.

"The revision will be keeping in view the economic trend in the country, interest rates of various schemes as well as the 7th Pay Commission," Dattatreya told reporters.

Asked about the interim announcement, he said the prevailing situations need to be analysed and after that the CBT will again meet in the future to decide the interest rate.

The minister said the trade union had demanded an interest rate of 9 per cent, but paying at that rate would have left the retirement fund body with a deficit of Rs 102 crore (Rs 1.02 billion).

The projected income of EPFO with a subscriber base of 4 crore (40 million) is at Rs 34,844 crore (Rs 348.44 billion), he added.

EPFO's advisory body Finance Advisory and Investment Committee had recommended that 8.95 per cent rate of interest on PF deposits for 2015-16 was feasible as it would leave a surplus of Rs 91 crore (Rs 910 million).

Trade unions had demanded 8.9 per cent interest rate, which would have left a surplus of Rs 285 crore (Rs 2.85 billion).

And in the case of 8.8 per cent, the surplus will be Rs 673 crore (Rs 6.73 billion), the minister further said.

Illustration by Uttam Ghosh/Rediff.com