EPF interest may remain at 8.5 per cent in 2010-11

EPF interest may remain at 8.5 per cent in 2010-11

The Finance and Investment Committee (FIC) of the EPFO has recommended 8.5 per cent interest rate for the current fiscal and a final decision will be taken by CBT, headed by Labour and Employment Minister Mallikarjun Kharge.

The CBT will also take a view on raising the benefit from Rs 60,000 to Rs one lakh under the Employees Deposit- Linked Insurance (EDLI) Scheme for EPFO subscribers in case he/she dies before superannuation.

The labour ministry had already accepted a proposal to raise the ceiling under the EDIL.
About raising the interest limit in PF deposit, an official in the Labour and Employment Ministry said the FIC in its meeting held in February this year, had firmed up its view to maintain 8.5 per cent interest rate on deposits for 2010-11, despite opposition from trade union representatives. The decision would leave a surplus of Rs 15.26 crore.

Trade unions had been demanding an interest of 8.75 per cent, which the committee had objected, saying it would leave a huge deficit in EPFO's fund."Since increasing the rate to 8.75 per cent for next fiscal would result in a huge deficit of Rs 426.53 crore, the FIC had decided to pay 8.5 per cent for the sixth year in a row," sources had then said.

The unions had also been demanding for long to raise benefit under EDLI scheme as payment of claims from its corpus is much less than the receipts.The corpus under the scheme has risen to Rs 7,457.69 crore in 2008-09 from Rs 7,089.29 crore in the preceding fiscal on account on rising contribution. The amount given towards settlement, however, has remained constant at Rs 48 crore during these three years.

The meeting may also consider raising wage ceiling from the existing Rs 6500 to Rs 15,000 to bring more employees under the EPF scheme and help them avail provident fund benefits.