The trustees of the Employees’ Provident Fund Organisation on Tuesday decided against hiking the interest rate on provident funds for 2014-15, despite protests by trade union representatives.
“The Central Board of Trustees took a majority decision to retain the interest rate at 8.75 per cent ( 2013-14 rate),” said Labour Minister Narendra Singh Tomar, after the meeting. The decision will be conveyed to the Finance Ministry for ratification.
Investment norms for the over ₹5-lakh-crore corpus have been relaxed to generate higher returns, Tomar said. It will be possible to invest up to 100 per cent in Government securities in the short term, he added.
“Options for long-term investments will also be discussed,” he said, adding that a separate cell would be set up to work out a budget for investment, especially in public sector units. He said Crisil had been appointed as a consultant and a decision on fund managers would be taken after it submits recommendations.
A decision on investing retirement funds in the equity market, however, was deferred after trade unions objected.
“We strongly opposed investment of PF money in the equity market,” M Jagadhiswara Rao, a member of the Board and All India Secretary of the BJP-backed Bharatiya Mazdoor Sangh, told BusinessLine .
He said EPFO officials, in fact, wanted to reduce the interest rate to 8.7 per cent, while the trade unions demanded at least 9 per cent, which is feasible if interest is not deposited into inoperative accounts worth ₹20,000 crore.
Service charges reduced The service charges levied by SBI on EPF collections (remittances made by establishments as EPF contribution) have been reduced from the existing uniform rate of ₹3 per ₹1,000.
The charges have been reduced to ₹1.80 per ₹1,000 for net based transactions and ₹2.40 per ₹1,000 for physical transactions. This reduction in rates is expected to result in savings to the tune of around ₹100 crore a year for the EPFO.