Unions up in arms against Finmin's opposition to 9.5% PF rate

"We won't let it happen. It is anti-labour. This is workers' money and the trustees of the money decided it in accordance with the law ", Secretary Hind Mazoor Sabha, A D Nagpal told PTI when asked about the Finance Ministry's stand on paying better returns to over 4.71 crore subscribers of EPFO.

Finance Secretary Ashok Chawla reportedly wrote to the Labour Ministry opposing payment of 9.5 per cent interest rate on PF deposits.

When contacted, Labour Ministry sources said that they would soon be sending a reply to the letter after consulting the Employees Provident Fund Organisation (EPFO).

The Central Board of Trustees (CBT), highest policy- making body of the EPFO, which is headed by Labour Minister Mallikarjun Kharge had raised the interest rate on PF deposits for 2010-11 to 9.5 per rate from 8.5 per cent in September, after it found a surplus of over Rs 1,700 crore.

The EPFO had been paying an interest rate of 8.5 per cent since 2005-06.
Nagpal, who is also a member of the CBT, and instrumental in finding out the surplus amount, said,  "Finance Ministry has to see that there is no overdrawal from the Interest Suspense Account. This money belongs to workers and has to be given to them".

The Finance Ministry, he further said, "should not drag its feet as it is workers' money".
Expressing similar views, Secretary of the All India Trade Union Congress (AITUC) D L Sachdev said, "Their (Finance Ministry's) stand is unreasonable. This is surplus money detected after verification of Interest Suspense Account over several years".

"This money belongs to workers and CBT in its wisdom decided to give it to workers by raising rate of return from 8.5 to 9.5 per cent for 2010-11", he added.

He further said that "by this decision the Finance Ministry is trying to pressurise Ministry of Labour and Employment and CBT to agree for investing a portion of EPFO's large corpus of Rs 3 lakh crore in stock market."

The CBT had several times in the past rejected the Finance Ministry's proposal of parking EPFO funds in stock markets.

Finance Ministry, under its new investment pattern issued in August 2008, had asked the EPFO to invest up to 15 per cent of its funds in equities.