Over 40 million Employees Provident Fund Organisation (EPFO) subscribers can look forward to a higher rate of interest on their provident fund (PF) deposits for the fiscal 2008-09 with the labour ministry pressing for it with the finance ministry.
The PF subscribers received 8.5 per cent return on their deposits during the last financial year. With the surge in the lending rates, the labour ministry has made out a strong case for upward revision of interest rate on Special Deposit Scheme (SDS), which constitutes nearly 80 per cent of PF investments.
“We are meeting the finance minister for enhancement of interest rate on SDS. If the market rate is higher, we can demand for more and can get it,” Minister of Labour and Employment Oscar Fernandes said on the sidelines of a CII seminar here.
Fernandes said had the EPFO invested money in any other avenue other than SDS, “we would have been earning more”.
He ruled out the EPFO money finding way to the volatile equity market, stating the trustees of Rs 240,000 crore corpus are against it.
“The CBT members are not in favour of investing in equities, because there are sharp fluctuations in the market. There is risk on investments in equity.”
Also Read
Faced with prospects of a deficit of Rs 139 crore on 8.5 per cent rate, EPFO has so far not declared interest rate for 2008-09.
Labour Secretary Sudha Pillai, present on the occasion, said, “We have brought to the notice of the finance ministry that it is less as compared to the market rate.”