April 12, 2002

    The Central Board of Trustees of the Employees Provident Fund has at its special meeting here today urged the Finance Ministry to reconsider its decision and allow the Fund to pay 9.5% to its subscribers for the current financial year. Announcing the unanimous decision of the CBT, its Chairman and the Labour Minister Shri Sharad Yadav said : "After discussion, CBT was of the view that it would be sustainable to fix the rate of interest for 2002 –03 at 9.5%. CBT desired that the rate of interest of 9.5% recommended on interim basis in the last meeting should continue and that in the meantime Central Government should review the matter. Another meeting of the CBT may be convened in case Central Government does not agree with the above recommendations of the CBT." Regarding sustainability, Shri Yadav said that after paying 9.5% rate of interest to the subscribers the Fund would be left with a surplus of about 115 crore rupees. He said that in case of 9% interest rate as proposed by the Finance Ministry is paid the Fund would have surplus of Rs.411.49 crores.

    The Finance Ministry had not accepted the interim recommendation of 9.5% proposed by the CBT in January, saying that it would not be sustainable. It had urged the Labour Ministry to review its proposal and bring it in alignment with the interest rate of PPF and GPF. During the discussions the members expressed the views that the interest earned by the Fund is the workers’ money which should be paid to them.

    Apprising the members of the Government’s view point, the Labour Secretary Shri Vinod Vaish said that in the present economic scenario when yields on investments are dropping well below 9%, the Special Deposit Scheme (SDS) is the safest instrument of investment of the EPF. About 80% of the EPF corpus is invested in SDS, another about 14% in State Government Loans, Government Guaranteed Loans, Public Section/Financial Institutions while the remaining 7% is invested in Central Government Loans. The Government has reduced the interest rate on SDS to 9% from April 1, 2000.