In the face of mounting pressure from trade unions, the Employees Provident Fund rates may remain untouched at 9.5 per cent this year though a sub-committee of the EPF Board is believed to have recommended slashing it to eight per cent.
Trade unions, cutting across party lines, have pitched for higher 12 per cent, saying that it would still be well within the "limits" and not lead to deficit for the country's largest provident fund, totalling about Rs 75,000 crore (Rs 750 billion).
The Finance and Investment Sub-committee, which met in New Delhi on Tuesday, is of the view that interest cannot be more than 8 per cent for the 3 crore (30 million) susbcribers in view of EPFO's declining returns from its investments.
Moreover, over 70 per cent of the EPF accounts had less than Rs 4,000 due to early withdrawals and about 1 crore (10 million) subscribers accounts were yet to be credited.
Besides, 80 per cent of the EPFO's investments were in Special Deposit Schemes, which offer only 8 per cent return.
The decision of the sub-committee will now be taken up at the meeting of the Central Board of Trustees of EPFO on Wednesday.
As EPF rates had political implications, particularly with Left Parties being part of the ruling UPA Government, it is unlikely that rates would be tinkered with.
Once the CBT decides on the issue, it will be referred to the finance ministry after which the labour ministry will issue the necessary notification.
Cut PF rate to 8%, says panel
A sub-committee of the country's biggest provident fund, Employees Provident Fund Organisation, is believed to have recommended slashing of interest rates to eight per cent for its 3 crore (30 million) subscribers, even as some trade unions pitched for hiking the rate to 12 per cent from the present 9.5 per cent.
The suggestion of Finance and Investment Sub-committee will now be referred to the Central Board of Trustees of Employees Provident Fund Organisation, which will meet on Wednesday to consider the revision in rate among other things, official sources told PTI in New Delhi.
Once CBT approves the proposal, it will be referred to the finance and labour ministries for their nod, they added.
The proposal of the EPFO panel assumes importance in the wake of finance ministry's views on lowering EPF rate as there is no instrument in the market that could promise such high rate.
However, the labour ministry stuck to the high rates considering the EPFO's comfortable reserve position.
