Millennium Post

FinMin nod to 8.5% interest on provident fund this week

The Finance Ministry is likely to approve this week payment of 8.5 per cent rate interest to over 50 million EPFO subscribers for 2012-13, a move that will ensure smooth settlement of claims.

'We had raised the issue of delay in implementing of EPFO's decision with the Labour Ministry. They told us that it would be done this week. Perhaps the Finance Ministry could not do it because of extended weekend last week as Ram Navami fell on Friday,' All India Trade Union Congress secretary D L Sachdev said.

The Employees Provident Fund Organisation's (EPFO) apex decision making body, the Central Board of Trustee (CBT), had decided to pay 8.5 per cent rate of interest to subscribers for 2012-13 on 25 February. As a practice, the CBT decision on interest rate requires ratification by the Finance Ministry before it is implemented.

According to norms, EPFO should announce rate of interest on PF deposits before the beginning of a financial year.

However, for the past few years, this has been taking place by the end of fiscal. This time, the rate of interest would be notified after the end of the financial year. According to Sachdev 'In the absence of any interest rate notification, EPFO is settling claims at 8.25 per cent interest rate on PF deposits for 2012-13.'

Existing EPFO norms provides previous fiscal's notified rate of interest on deposits for settlement of claims in cases where the current financial year's rate of return is not notified. EPFO had fixed rate of interest on deposits for 2011-12 at 8.25 per cent.

Once the interest rate is notified, any subscriber whose account is settled at previous fiscal's rate is required to file fresh application for payment of differential amount, which causes hardships, he added.
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