January 22, 2002

    The Central Board of Trustees has recommended to continue 9.5% as the rate of interest to Employment Provident Fund subscribers as an interim measure for 2002-03. The decision was taken at its meeting being held here today under the Chairmanship of the Labour Minister Shri Sharad Yadav. It was decided that the Board would meet again in March to review the overall situation regarding interest earnings by the Fund. It is expected that the interest earnings would be rupees 5,978.50 crore whereas expected payment of interest to EPF subscribers at the rate of 9.5% in 2002-03 is expected to be Rs.5,630.69 crores leaving a surplus of Rs.347.90 crore. The meeting was informed that exact financial position regarding interest earnings would be known only after the presentation of general budget for the next financial year.

    The Corpus of the Employment Provident Fund was Rs.59,938.63 crore as on 31^st December 2001. Of this 79.55% is in investment holding in Special Deposit Scheme, 8.18 % in Public Sector/Financial Institutions, 7.06% in Central Government Loans, 3.95% in State Government Loans and 1.26% in Government Guaranteed Loans. The Fund is being invested according to pattern of investment holding prescribed by the Government of India from time to time.

    The Meeting also had a consensus on the proposed amendments to the Employees Provident Fund & Miscellaneous Provision Act 1952 in lieu of the mobility of workforce from formal to informal sector due to the increase in the outsourcing of work. It was decided to refer the issue to the Executive Committee to have an in depth study before recommending the proposed amendments. The proposed amendments include policy changes for increase in coverage and reducing the threshold limit for coverage. The EPF and MPF Act will be made mandatory for all employees including those in higher income brackets. However, contribution for such employees shall be mandatory upto present monetary level of Rs.6,500, but they can contribute more if they voluntarily desire so. The amendments also include flexibility in offering one or more packages particularly in pensionary benefits for those sectors of economy which cannot bear the existing financial burden under the present law. It is also proposed to introduce a provision for unemployment insurance to members at graded rates so as to tide over difficulties as a result of involuntary unemployment.

    Addressing the meeting Labour Minister Shri Sharad Yadav said that extending the EPF scheme to informal sector is the biggest challenge which has to be met. He said that it should be our endeavour to increase the membership of the EPF to 10 crores within a span of 16 years which will encompass a significant portion of informal sector employees.