FinMin lowers EPF rate to 8.7% for FY16, trade unions protest

The EPFO pays rate of return to its subscribers on the basis of returns it generates from its investments.

Setting aside retirement fund body EPFO trustees' decision, the Finance Ministry lowered interest rate on PF deposits to 8.7 per cent for 2015-16, evoking strong protest from trade unions that dubbed the move as 'anti-labour'.

As against the decision of the Labour Minister-headed Central Board of Trustees' to provide 8.8 per cent rate of interest on PF deposits for 2015-16, the Finance Ministry has approved 8.7 per cent interest rate, which has implication for over 5 crore subscribers of the Employees' Provident Fund Organisation (EPFO).

"The (EPFO's apex decision-making body) CBT, at its meeting held in February 2016, had proposed an interim rate of interest at 8.8 per cent to be credited to the accounts of EPF subscribers for 2015-16. The Finance Ministry has, however, ratified an interest rate of 8.7 per cent," Labour Minister Bandaru Dattatreya said in a written reply to the Lok Sabha on Monday.

Trade unions including RSS-backed Bharatiya Mazdoor Sangh (BMS) have lodged their protest against the Finance Ministry's decision of lowering the interest rate approved by the CBT.

"BMS strongly condemns the cut in EPF interest rates and will hold demonstrations at EPF offices on April 27," BMS General Secretary Virjesh Upadhyay said, adding the Fund is managed by the CBT, an independent and autonomous body.

"The step taken by the Finance Ministry to over-r le the recommendation of the CBT is not acceptable. It is a wrong step and is an encroachment by the Finance Ministry in EPF's functioning," he said.

Echoing similar views, Indian Trade Union Congress vice president Ashok Singh said, "It is wrong. When the CBT agreed on 8.8 per cent, who is Finance Minister Arun Jaitley to interfere in it."

He argued, "The government does not provide any monetary support to EPFO and it is the workers' money. Thus the government has no right to interfere in this. We will strongly protest it and it will also be an issue in the Bharat Bandh on September 2."