EPFO panel pegs interest rate at 8.25%

The investment panel of the Employees Provident Fund has recommended 8.25 per cent interest rate for 2007-08 (April-March) to be paid to its subscribers, a senior labour ministry official said today.

"However, the panel has stuck to its earlier recommendation of 8 per cent interest rate for the last fiscal," the official told NewsWire18.

The board of trustees of EPF is meeting on May 27 to decide the interest to be paid to its subscribers for 2006-07 (Apr-Mar) and the current fiscal.

The board could not arrive on a consensus on interest rate to be paid to subscribers for 2006-07 at its last three meetings due to sharp differences between the trustees, comprising representatives of trade unions, government officials, and employers.

The trade unions are demanding a higher rate of interest rate than recommended by the investment committee.

According to EPF Organisation, the fund will earn a surplus of Rs 270 crore at 8 per cent interest.

However, there will be a deficit of Rs 450 crore if the interest rate is kept unchanged at 8.5 per cent.

EPF paid 8.5 per cent to its subscribers in 2005-06.

Currently subscribers seeking claims from the EPF are being credited interest only up to Mar 2006. Also, those who have stayed invested with the fund are not getting any interest on their money as of now till a decision is arrived at.

EPF is India's largest non-government provident fund with a corpus of about Rs 96,770 crore.

About 60 per cent of the total corpus is invested in a Special Deposit Scheme, which earns an interest of 8 per cent. All other provident funds in the country""like General Provident Fund and Public Provident Fund""pay an interest rate of 8 per cent to subscribers.