EPF rate of 9.5% may be maintained next year too

Hopeful of a buoyant recovery and the timely completion of business process re-engineering of the Employees Provident Fund Organisation, Labour Minister Sahib Singh Verma on Tuesday expressed confidence that the 9.5 per cent EPF interest rate could be maintained next year, in spite of the falling interest rates.

"May be next year too, we will be able to maintain 9.5 per cent interest," Verma told reporters in New Delhi, adding that the EPFO had been able to give the rate this year due to handsome recovery in the recent past (a nine-fold increase over that in the 1990s).

He said once the BPR was complete, the accounts would be credited instantaneously and could save up to Rs 100 crore (Rs 1 billion) a year in interest income by avoiding delay.

He said he was confident that the EPFO could recover over Rs 1,511 crore (Rs 15.11 billion) through its new action packed recovery strategy 'Complaince-04' and to that extent there would be an increase in the income for the organisation, enabling it to pass on to over 3.2 crore subscribers.

At present, the investment income (or corpus) of the EPFO stands at over Rs 1,40,000 crore (Rs 1,400 billion) with 80 per cent of it in the special deposit scheme, in which further investments had been terminated from June by the finance ministry.

The Central Board of Trustees of EPFO had recently cut the interest by 0.5 per cent, while doling out a golden jubilee year bonus of 0.5 per cent, thus virtually maintaining the EPF interest at 9.5 per cent for this financial year.

The surplus left with EPFO after paying out 9.5 per cent has been projected at Rs 25 crore (Rs 0.25 billion) in 2003-04 as compared to over Rs 160 crore (Rs 1.60 billion) in the previous year.