Union Labour Ministry and Employees Provident Fund Organisation (EPFO) are likely to keep the 8.65 per cent return proposed by the board of trustees despite the Finance Ministry’s objection. The Finance Ministry had objected to the proposal to increase the EPCO return rate from 8.55 per cent to 8.65 per cent for the year 2018-19.
Citing adequate reserves and Narendra Modi government’s backing to the proposal, the Labour Ministry and the Employees Provident Fund Organisation rejected Finance Ministry’s plea to review the rates.
According to reports, the EPFO will have a surplus of over Rs 150 crore despite the higher pay-out rates. Another reason for not reversing the decision was that representatives of labour unions, who are part of the EPFO board as trustees were not willing to change the decision.
The Central Board of Trustees (CBT) headed by Labour Minister, which finalises rate of interest on PF deposits for a financial year, is the apex decision-making body of the EPFO.
Once approved by the CBT, the proposal requires the concurrence of the Finance Ministry. The interest rate is credited into the subscribers account after the Finance Ministry's approval.
The EPFO had provided a five-year low rate of interest of 8.55 per cent to its subscribers for 2017-18. The body had kept the interest rate at 8.65 per cent in 2016-17 and 8.8 per cent in 2015-16. It provided 8.75 per cent interest for 2013-14 as well as 2014-15. The rate of interest was 8.5 per cent in 2012-13.