The Finance Ministry has approved 8.7 per cent interest on PF deposits for over 5 crore subscribers of retirement body EPFO, lower than 8.8 per cent decided by the Central Board of Trustees (CBT).
"The (EPFO's apex decision-making body) CBT, at its meeting held in February 2016, has proposed an interim rate of interest at 8.8 per cent to be credited to the accounts of Employees' Provident Fund subscribers for 2015-16.
The Ministry of Finance has, however, ratified an interest rate of 8.7 per cent," Labour Minister Bandaru Dattatreya said in a written reply to the Lok Sabha today.
This is probably the first time that the Finance Ministry has not given concurrence to the rate of interest on EPF as decided by CBT, which is headed by the labour minister.
EPFO had provided 8.75 per cent rate of interest in 2013-14 and 2014-15, which was higher than 8.5 per cent in 2012-13 and 8.25 per cent in 2011-12.
EPFO's estimates, which were worked out in September, projected that the body can easily pay 8.95 per cent rate of interest as it would leave a surplus of Rs 100 crore.
The EPFO pays rate of return to its subscribers on the basis of returns it generates from its investments.
However, despite the employees representatives' demand for 9 per cent rate of interest for the fiscal, the CBT at its meeting held on February 16 decided to provide an interim interest rate of 8.8 per cent for 2015-16.
Later, Dattatreya had assured that the Employees' Provident Fund Organisation will not revise its interim interest rate of 8.8 per cent downward for 2015-16. "We will not revise it (interim interest rate) downwards.
The revision will be keeping in view of the economic trend in the country, interest rates of various schemes as well as the 7th Pay Commission," Dattatreya had said.
Asked about the interim announcement, he had said the prevailing situations need to be analysed and after that, CBT will again meet in future to decide the interest rate.