Unions to press for 9.5% interest on PF deposits for FY14

According to EPFO estimates, payment of 8.5% rate of interest on PF deposit for this fiscal will leave a small surplus of Rs 57 crore

Trade unions will press for 9.5% interest on PF deposits to over five crore subscribers for the current fiscal at next week's meeting of the trustees of retirement fund body EPFO.

The Employees' Provident Fund Organisation's apex decision making body the Central Board of Trustees (CBT) will meet on Monday to discuss and approve the proposal regarding rate of return to be provided on PF deposits in 2013-14.

"We will demand for 9.5% rate of interest for subscribers for the current fiscal, higher than 8.5% provided for 2012-13," All India Trade Union Secretary and a CBT member D L Sachdev told PTI.

He said: "This rate of 8.5% is less than the interest provided by banks these days, and would not be able to cover inflation."

Retail inflation for industrial workers in November was 11.47%. This is the rate of inflation which is used by central government for computing hike in Dearness Allowance.

According to EPFO estimates in its proposal for the trustees, payment of 8.5% rate of interest on PF deposit for this fiscal would leave a small surplus of Rs 56.96 crore.

The EPFO, which is estimated to have an income of Rs 20,796.96 crore in the current fiscal, needs Rs 20,740 crore to pay 8.5% interest to its subscribers, as per the agenda listed for the CBT meeting.

As per the estimates, hiking the interest payment by half a percent to 9% would require an additional amount of Rs 1,220 crore, which does not seem feasible.

However, another EPFO trustee and All India Secretary Bhartiya Mazdoor Sangh Virjesh Upadhyay said: "The interest rate for this fiscal could be higher than 8.5% provided in 2012-13.

"We have certain suggestions. We will put those before the CBT. If we reduce certain administrative expenses and improve efficiency then payment of interest rate higher than 8.5% will be possible."

Upadhyay said that he would also demand 9.5% interest on PF deposits for 2013-14.