<p>"EPFO's apex decision-making body, the Central Board of Trustees (CBT), is likely to fix 8.5 per cent interest for subscribers at its meeting scheduled for September 10," a source said.<br /><br />He said that maintaining 8.5 per cent rate of return for depositors is expected to leave a surplus of Rs 15.26 crore with EPFO. The organisation has been giving 8.5 per cent rate of return to the subscribers since 2005-06.<br /><br />In April, the trustees of the Employees' Provident Fund Organisation's (EPFO) had deferred a decision on rate of return for its subscribers for 2010-11.<br /><br />Some trustees had reservations against fixing interest rate on the basis of income and interest payout projections for current fiscal by EPFO official. They had demanded a comparative analysis of what was projected and the actual interest payout and liabilities in the past years.<br /><br />The analysis indicated that in the past three financial years, the actual deficit remained higher than the projected.<br /><br />EPFO invests in central and state government securties as well as in public sector undertakings and financial institutions.<br /><br />In 2009-10, EPFO projected that there would a surplus of Rs 6.4 crore on maintaining 8.5 per cent interest rate. But it turned out to be a deficit of Rs 291.08 crore.<br /><br />Similarly, for 2008-09, a deficit of Rs 139.25 crore was estimated for maintaining interest rate at 8.5 per cent which amounted to Rs 157.62 crore. In 2007-08, for providing at return of 8.5 per cent, the estimated shortfall was Rs 263.78 which again went up to Rs 499.45 after interest payouts.<br /><br />The employees' representatives demanded at the last meeting that the rate of return on provident fund deposits be raised to 9.5-10.5 per cent from 8.5 per cent.<br /><br />The EPFO's key advisory body, the Finance and Investment Committee (FIC), had recommended 8.5 per cent interest rate for 2010-11 at a meeting held on February 26 this year.<br /><br />The FIC recommendations are usually accepted by the CBT. The committee had said that maintaining 8.5 per cent interest rate would leave a surplus of Rs 15.26 crore. The EPFO has estimated an income of Rs 15,036 crore in 2010-11.<br /><br />FIC had also indicated that increasing the rate to 8.75 per cent for the next fiscal would result in a huge deficit of Rs 426.53 crore and 9 per cent return would result in a deficit of over Rs 868 crore.<br /><br />The retirement fund manager had maintained an interest rate of 9.5 per cent for three consecutive financial years between 2002 and 2005.</p>
<p>"EPFO's apex decision-making body, the Central Board of Trustees (CBT), is likely to fix 8.5 per cent interest for subscribers at its meeting scheduled for September 10," a source said.<br /><br />He said that maintaining 8.5 per cent rate of return for depositors is expected to leave a surplus of Rs 15.26 crore with EPFO. The organisation has been giving 8.5 per cent rate of return to the subscribers since 2005-06.<br /><br />In April, the trustees of the Employees' Provident Fund Organisation's (EPFO) had deferred a decision on rate of return for its subscribers for 2010-11.<br /><br />Some trustees had reservations against fixing interest rate on the basis of income and interest payout projections for current fiscal by EPFO official. They had demanded a comparative analysis of what was projected and the actual interest payout and liabilities in the past years.<br /><br />The analysis indicated that in the past three financial years, the actual deficit remained higher than the projected.<br /><br />EPFO invests in central and state government securties as well as in public sector undertakings and financial institutions.<br /><br />In 2009-10, EPFO projected that there would a surplus of Rs 6.4 crore on maintaining 8.5 per cent interest rate. But it turned out to be a deficit of Rs 291.08 crore.<br /><br />Similarly, for 2008-09, a deficit of Rs 139.25 crore was estimated for maintaining interest rate at 8.5 per cent which amounted to Rs 157.62 crore. In 2007-08, for providing at return of 8.5 per cent, the estimated shortfall was Rs 263.78 which again went up to Rs 499.45 after interest payouts.<br /><br />The employees' representatives demanded at the last meeting that the rate of return on provident fund deposits be raised to 9.5-10.5 per cent from 8.5 per cent.<br /><br />The EPFO's key advisory body, the Finance and Investment Committee (FIC), had recommended 8.5 per cent interest rate for 2010-11 at a meeting held on February 26 this year.<br /><br />The FIC recommendations are usually accepted by the CBT. The committee had said that maintaining 8.5 per cent interest rate would leave a surplus of Rs 15.26 crore. The EPFO has estimated an income of Rs 15,036 crore in 2010-11.<br /><br />FIC had also indicated that increasing the rate to 8.75 per cent for the next fiscal would result in a huge deficit of Rs 426.53 crore and 9 per cent return would result in a deficit of over Rs 868 crore.<br /><br />The retirement fund manager had maintained an interest rate of 9.5 per cent for three consecutive financial years between 2002 and 2005.</p>