EPF rate hiked to 9.5 pc

EPF rate hiked to 9.5 pc

Finance ministry approves EPFO recommendation

The subscribers to the EPF maintained by the Employees Provident Fund Organisation (EPFO) have been getting interest at the rate of 8.5 per cent on their deposits since 2005-06. The EPFO had recommended an increase in interest rate to 9.5 per cent on retirement savings for the current fiscal after discovering a surplus of Rs 1,731 crore in its books of account.

Though the Central Board of Trustees, which is the apex deciding body of the EPFO, has recommended to provide higher interest rate of 9.5 per cent on deposits of the subscribers to EPF, it was awaiting the approval of the Finance Ministry of its proposal. “The Finance Ministry has ratified 9.5 percent rate of return on PF deposits for 2010-11. We have received a notification in this regard,” said Central Provident Fund Commissioner Samirendra Chatterjee. The Ministry has been showing reluctance to ratify the proposal . The Finance Ministry’s contention was that the surplus shown by the EPFO was not real after a report by the Comptroller and Auditor General has described the so called surplus as shown by the EPFO was unverifiable. “Our calculations regarding Rs 1,731 crore surplus in the interest suspense account were found correct by the Finance Ministry and so they approved this higher rate of return”, Chatterjee said.

Sources in the Finance Ministry said the Ministry’s approval was  subject to the condition that any shortfall on account of payment of 9.5 percent rate of return would be met by making adjustments in the interest rate in 2011-12.

Chatterjee maintained that there would be no need for making any adjustment in the next fiscal as calculations were correct regarding the discovery of a surplus of Rs 1,731 crore in the interest suspense account.