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Retirement fund body EPFO (Employees' Provident Fund Organisation) paid a lesser amount as interest on the provident fund (PF) deposits of 50 million subscribers than its earnings between 2007-08 and 2010-11, government auditor Comptroller and Auditor General of India (CAG) said in a report on EPFO for 2011-12, tabled in Parliament on Tuesday.
The EPFO earned Rs 7,780 crore in 2006-07 and credited Rs 7,976 crore to subscriber accounts in the year. In 2011-12, it earned Rs 17,880 crore and credited Rs 23,146 crore.
In 2007-08, it earned Rs 8,707 crore on investments but credited Rs 7,854.60 crore. A lesser amount of Rs 9,268 crore was credited against an income of Rs 10,667 crore in 2008-09. In 2009-10, it credited Rs 9,632 crore compared to its income of Rs 11,934 crore. It credited Rs 8,719 crore against an income of Rs 14,182 crore in 2010-11.
The CAG has said there were gaps between the declared rate of interest and the rate it was earning on investments. The earnings on investments were 7.49 per cent, 7.17 per cent and 7.46 per cent in that order for three straight financial years starting 2006-07. The earnings were 7.09 per cent, 7.05 per cent and 7.53 per cent for 2009-10, 2010-11 and 2011-12, respectively. However, the EPFO declared an 8.5 per cent rate of interest on deposits for four consecutive financial years starting 2006-07.
It raised the rate of interest to 9.5 per cent in 2010-11 after discovering a surplus in interest suspense account and then reduced it to 8.25 per cent for 2011-12. The CAG said the "total amount of money under the EPFO corpus was more than the cumulative balance with all its subscribers, and the difference was increasing over the years. The gap could be due to non-updation of accounts, unclaimed accounts, and moneys in transit, etc. This is reflective of inadequate services to its subscribers." The report said the interest suspense account balance was not a true reflection of sums available for distribution as interest to the subscribers, in the absence of non-updation of 3.8 million subscribers' accounts as of March 2012.
