Amid possibility of a 0.5 per cent cut in the interest rate for the current fiscal, the Employees Provident Fund Board will meet in New Delhi on January 27 to finalise the EPF rate, which is 8.5 per cent at present.
EPFO sources said the organisation was facing acute shortage of funds and would be left with a surplus of only Rs 10.25 crore (Rs 102.5 million) if it paid eight per cent interest in the current financial year. If the existing rate of 8.5 per cent had to be retained, the EPFO would face a deficit of Rs 450 crore (Rs 4.5 billion).
The Central Board of Trustees of EPF at its last meeting in New Delhi on December 7 had failed to arrive at a consensus on interest rate to be given to its more than four crore (40 million) members for this fiscal because of the financial position.
While trade unions, particularly those affiliated with the Left parties, demanded a 9.5 per cent interest rate, representatives of employers and state and central government officials were of the view that the rate should be in proportion to the returns on the investments of the fund.
The government had last year cut the rate to 8.5 per cent for 2005-06 from 9.5 per cent in 2004-05. The January 27 meeting of the EPF Central Board of Trustees is likely to firm up a decision on investing a part of the fund in stock market as income from investing in government-run Special Deposit Scheme, which gave only eight per cent interest, did not suffice, the sources said.
Trade unions, mostly affiliated to Left parties, which support the government from outside, are angry over the fall in EPF interest rate and have opposed any more cut.
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