EPF rate may remain at 8.5%
Tribune, 24-07-07

Amid pressure by Left-backed trade unions not to tinker with the current 8.5 per cent interest rate on Employees Provident Fund, the government on Wednesday said it will try to retain the rate for the four crore EPF subscribers in the country.

"The Labour Ministry would make an attempt to sustain the EPF interest rate at 8.5 per cent in a bid to provide relief to all employees, particularly in view when labour employment generation would increase," Labour Minister Oscar Fernandes said on the sidelines of an Assocham seminar.

EPF trustees are scheduled to meet on July 23 and efforts would be created for consensus so that the EPF interest rate is not brought down below 8.5 per cent, he said.

The EPF Board met half-a-dozen times this year but could not reach a decision because of pressure from trade unions. At its last meeting on May 27, the Board had decided to have a fresh look at the matter on July 2. The meeting was later called off.
Fernandes had then cited the model code of conduct for Goa Assembly polls as coming in the way of taking a decision.
While Leftist trade unions are opposing any cut in the rate from the existing 8.5 per cent, Fernandes is of the view that for 2006-07, the rate of interest would depend on the fund available with the EPF while the higher rate of interest offered by commercial banks would be taken into account for future calculations.

EPF rate to stay at 8.5%
Business Standard, 24-07-07

The Central Board of Trustees of the Employees Provident Fund (EPF) today recommended payment of 8.5 per cent interest to the members of the fund for 2006-07.

The much-awaited decision was taken at a special meeting of the Central Board of Trustees presided over by Minister of State (Independent Charge) for Labour and Employment Oscar Fernandes.

The decision came after the board accepted the report of a sub-committee appointed to look into the accounts of the fund. The board said the deficit of Rs 449.90 crore would be met from the interest suspense account.

The fund’s expected interest income in 2006-07 would be Rs 7372.67 crore while the liability, at 8.5 per cent rate, would be Rs 7822.57 crore, an official said.

Fernandes said the sub-committee mentioned an accumulated balance of Rs 347.78 crore, Rs 185.69 crore in the contingency reserve fund and Rs 56.69 crore in the special reserve fund, totalling Rs 590.16 crore.

EPF interest to stay 8.5% for FY07
Financial Express, 24-07-07

Coming under pressure from the Left-backed trade unions, the Employees Provident Fund Board on Monday agreed to continue paying 8.5% interest to nearly 4 crore of its subscribers for fiscal 2006-07. The same rate of interest was paid in the previous fiscal.

“Amid protests by some trade union representatives, it has been decided to pay 8.5% interest rate on provident fund,” labour minister Oscar Fernandes said after a three-hour meeting of the EPF Central Board of Trustees on Monday.
But the trade unions won’t budge as they stuck to their demand of 9.5%.

The decision to retain 8.5% interest will create a burden of Rs 450 crore on the EPF fund, but sources said this could be offset with a surplus of Rs 590 crore lying in the interest suspense account and the contingency reserve and special reserve fund.
The board will submit recommendations to the finance ministry, which is expected to notify the rate shortly. Fernandes said the EPF had set up a sub-committee to assess the board’s finances. The report of the committee found that the board would have a surplus of Rs 595 crore. Not just this, even after paying 8.5% interest, the fund will have a surplus of Rs 83 crore. The EPF has a corpus of Rs 94,000 crore, which includes the pension fund.

The total interest outgo for 2006-07 would be Rs 7,800 crore, Fernandes said, adding that the decision pertaining to interest payment for the current fiscal would be decided later.
Referring to the demand of trade unions to pay a higher interest rate, he said the board had set the rate only for the previous year. Since bank rates had gone up mainly this year, the board could consider revising the interest rate for 2007-08 later, he said.
The board also discussed the government’s suggestion to invest 5% of the corpus in the stock market, but no decision was taken.
The EPF Board met half-a-dozen times this year but could not reach a decision because of the pressure from the trade unions. At its last meeting on May 27, the Board had decided to take a fresh look at the matter on July 2. The meeting was later called off.

EPFO chances on surplus; to pay 8.5% interest on provident fund
Mint, 24-07-07

Trade unions unhappy with low rate fix, claim this year’s ‘find’ may hurt interests of subscribers next year

The board of trustees of the Employees’ Provident Fund Organisation (EPFO) has agreed on Monday to pay subscribers 8.5% on their provident fund deposits for the year 2006-07.

The decision comes days after an internal committee of EPFO claimed to have discovered hundreds of crores of rupees in an interest suspense account. If this money had not been discovered, the board would have had to restrict payout at 8%.
“Amid protests by some trade union representatives, it has been decided to pay 8.5% interest rate on provident fund,” labour and employment minister Oscar Fernandes said after a three-hour meeting of the Central Board of Trustees (CBT) of the fund.
Trade union representatives on the board said that the 8.5% rate is 1% lower than they expected. They also said that the internal committee that has now found the money to pay 8.5% interest had examined the same accounts in November 2006 and declared that EPFO could only pay 8% interest.

“I have told the government that no amount of accounting jugglery will sort out the funds crunch in the EPFO,” said W.R. Varada Rajan, secretary, Centre of Indian Trade Unions (Citu), who is on the CBT. This year’s “find” will hurt subscribers next year, he said, indicating that there could be a shortfall for next year’s interest payment.

Fernandes, who heads the CBT, could not be reached for comment on the availability of funds.
The internal committee headed by Allampalli Venkataram of the Bharatiya Mazdoor Sangh, a prominent trade union, has claimed that about Rs.590 crore of surplus has been found in the interest suspense account and special reserve fund. The government had earlier claimed.

Significantly, the same committee, in a November 21 report had concluded that surplus funds were not available. “Interest on subscribers accounts is given only by means of book entry and no actual impact would be felt at present if higher than 8% is permitted,” it had then said. However, it had warned that doing so and paying more than the fund’s earnings would “help some present subscribers but later subscribers will suffer if huge deficits are accumulated year after year.”

EPF Board retains 8.5 pc rate for 2006-07
Hindustan Times, 24-07-07

New Delhi, July 24 (PTI): Bowing to pressure from Left-backed trade unions, the Employees Provident Fund Board on Monday agreed to continue paying 8.5 per cent interest rate to its nearly four crore subscribers for fiscal 2006-07 as well.
"Amid protest by some trade union representatives, it has been decided to pay 8.5 per cent interest rate on provident fund," Labour Minister, Oscar Fernandes, told reporters after a three-hour meeting of the EPF Central Board of Trustees.
The decision to retain 8.5 per cent interest will put a burden of Rs 450 crore on the EPF fund, but sources said that the deficit could be offset from a surplus of Rs 590 crore lying in the Interest Suspense Account, Contingency Reserve and Special Reserve Fund.

The Board will submit its recommendations to the Finance Ministry, which is expected to notify the rate shortly.
Fernandes said the EPF had constituted a sub-committee to assess the Board's finances. The report of the committee placed before the meeting for deliberation found that there would be a surplus of Rs 595 crore with the board.
Even after paying 8.5 per cent interest rate, the fund would be having a surplus of Rs 83 crore. The EPF has a corpus of Rs 94,000 crore including pension fund.

The total interest outgo for 2006-07 will be to the tune of Rs 7,800 crore, Fernandes said, adding that the decision pertaining to interest payment for the current fiscal will be decided later.
Referring to the demand of trade unions to pay higher interest rate, he said the board had fixed interest rate only for the previous year. Since the bank rates have gone up mainly this year, the board can consider revising interest rate for 2007-08 later, he said.
Fernandes said the board also discussed the government's suggestion to invest five per cent of the corpus in the stock market, but no decision was taken.

However, representatives of the Left-affiliated trade unions rejected the decision of the board, while demanding at least 9.5 per cent interest rate.
"At a time when banks are paying even up to 10.5 per cent interest rate annually, the government should come forward to support the board to pay 9.5 per cent interest rate by raising administrative rate of interest on Special Deposit Scheme (SDS)," said Sankar Sen, General Secretary, United Trade Union Centre Lenin-Sarani.

EPF Board refuses to lower rate from 8.5%
Indian Express, 24-07-07

Rs 450 cr Burden: Deficit may be offset by Rs 590 cr surplus; interest this year will be Rs 7,800 cr
New Delhi, July 23: The Employees Provident Fund (EPF) Board today agreed to continue paying 8.5 per cent interest rate to its nearly 4 crore subscribers for fiscal 2006-07 as well. “Amid protests by some trade union representatives, it has been decided to pay 8.5 per cent interest rate on provident fund,” labour minister Oscar Fernandes said after a three-hour meeting of the EPF Central Board of Trustees.

Fernandes said that the EPF had constituted a sub-committee to assess the Board’s finances. The report of the committee, placed before the meeting for deliberation, found that there would be a surplus of Rs 595 crore with the board.
The decision to retain 8.5 per cent interest will put a burden of Rs 450 crore on the EPF fund but sources said that the deficit could be offset from a surplus of Rs 590 crore lying in the Interest Suspense Account, Contingency Reserve and Special Reserve Fund. The Board will submit its recommendations to the finance ministry, which is expected to notify the rate shortly.
Even after paying 8.5 per cent interest rate, the fund would be having a surplus of Rs 83 crore. The EPF has a corpus of Rs 94,000 crore including pension fund.

The total interest outgo for financial year 2006-07 will be approximately Rs 7,800 crore, Fernandes said, adding that the decision pertaining to interest payment for the current fiscal will be decided later. Referring to the demand of trade unions to pay higher interest rate, he said the board had fixed the interest rate only for the previous year.
Since the bank rates have gone up mainly this year, the board can consider revising interest rate for 2007-08 later, he said. Fernandes said the board also discussed the government’s suggestion to invest 5 per cent of the corpus in the stock market but no decision was taken.

However, representatives of the Left-affiliated trade unions rejected the decision of the board, while demanding at least 9.5 per cent interest rate. “At a time when banks are paying even up to 10.5 per cent interest rate annually, government should come forward to support the board to pay 9.5 per cent interest rate by raising administrative rate of interest on Special Deposit Scheme (SDS),” said United Trade Union Centre Lenin-Sarani General Secretary Sankar Sen.

Meet on indirect taxes from today : Top tax officials from all over the country will discuss ways to strengthen the indirect tax machinery and measures to improve compliance at a two-day conference to be inaugurated by finance minister P Chidambaram here on Tuesday. The All India Annual Conference of chief commissioners and directors general of customs and central excise will deliberate on dispute resolution, Goods and Service tax and emerging challenges before customs, among other things. The conference will act as a catalyst for providing important contribution to strengthening the Indirect Tax administration, it said.
During the the first quarter of the current fiscal, the government has collected Rs 48,732 crore through customs and excise duties, up 12.7 per cent from Rs 43,237 crore collected in the same period last year.