The advisory panel of retirement fund body EPFO has recommended a lower rate of interest of 8.25% for the current fiscal compared to 9.5% last year, a move that will affect over 4.7 crore subscribers.
The unions' representative on EPFO's advisory body, Finance and Investment Committee (FIC), has demanded maintaining the rate of interest at 9.5% for 2011-12.
"FIC opined that payment of 8.25% rate of return to its 4.7 crore subscribers during this fiscal is feasible," a source privy to the development said after a meeting today.
"The unionists present in the meeting demanded maintaining 9.5% rate of return as given in 2010-11 and pointed out inaccuracies in income projection for this fiscal by EPFO officials," the source added.
Now FIC's recommendations would be tabled before the Employees' Provident Fund Organisation's (EPFO) apex decision making body, the Central Board of Trustees' (CBT), headed by labour minister for taking a final call on the issue in its meeting scheduled tomorrow.
The source said the employees' representatives in the FIC meeting sought clarification about the income estimation error which was Rs 458.73 crore.
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They pointed out that when rate of return on over 85% of the investment made by the EPFO is fixed, how could they calculate this amount on entire possible income of the body.
EPFO has reduced 2.5% (Rs 458.73) crore as estimation error from estimated income of Rs 18,349.20 crore and projected an income of Rs 17,890.47 crore.