Retirement fund body EPFO will not revise its interim interest rate of 8.8 per cent downward for the current financial year, Labour Minister Bandaru Dattatreya said today.
"We will not revise it (interim interest rate) downwards. The revision will be keeping in view the economic trend in the country, interest rates of various schemes as well as the 7th Pay Commission," Dattatreya told reporters here.
When asked about the interim announcement, he said the prevailing situations need to be analysed and after that the CBT will again meet in the future to decide the interest rate.
The minister said the trade union had demanded an interest rate of 9 per cent, but paying at that rate would have left the retirement fund body with a deficit of Rs 102 crore.
The projected income of EPFO with a subscriber base of 4 crore is at Rs 34,844 crore, he added.
EPFO's advisory body Finance Advisory and Investment Committee (FAIC) had recommended that 8.95 per cent rate of interest on PF deposits for 2015-16 was feasible as it would leave a surplus of Rs 91 crore.
Trade unions' had demanded for 8.9 per cent interest rate, which would have left a surplus of Rs 285 crore. And in the case of 8.8 per cent, the surplus will be Rs 673 crore, the minister further said.
(REOPENS DCM58)
In a statement Labour Ministry said as per provisions of the EPF (Employees Provident Fund) Scheme, 1952, EPFO is required to credit interest to each member as determined by the government in consultation with the CBT.
In determining the rate of interest, Centre shall satisfy there is no overdrawal on the interest account as a result of crediting interest to the EPF members.
For 2015-16, the Rs 33,240.37-crore is available as net income for providing interest. The interest credited to EPF members for the years 2014-15 was Rs 28,902.38 crore leaving a surplus of Rs 1,604.05 crore, the Ministry said.
"Therefore, a total amount of Rs 34,844.42 crore is estimated to be available for crediting interest for the year 2015-16," it added.
At present rate of 8.75 per cent being credited as interest for the year 2014-15, a surplus of Rs 868 crores would accrue for 2015-16. At 8.80 per cent the liability would be Rs 34,170.57 crore leaving a surplus of Rs 673.85 crore.
The 211th CBT had decided to credit interest at 8.8 per cent as an interim measure leaving a surplus of Rs 673.85 crore and the interest will be credited to 15.5 crore EPF accounts, it said.
