About 4 crore subscribers of EPFO will get 8.65 per cent interest on provident fund deposits for 2016-17, as decided by the organisation's trustees in December, Labour Minister Bandaru Dattatreya said today.
The comments follow reports suggesting that the Finance Ministry is nudging the Labour Ministry to lower the EPF interest rate by up to 50 basis points.
"It is not like that. The CBT (EPFO trustees) had decided to give 8.65 per cent. Our ministry keeps on discussing with Finance Ministry. We would have surplus of Rs 158 crore on providing 8.65 per cent," Dattatreya said on being asked whether the Finance Ministry is making a case for lowering the interest rate.
"If need be, I will talk to them (Finance Ministry). I have requested them to approve 8.65 per cent. In any case this amount (interest income) will be given to workers. But how and when it will be provided, this is the question," he added.
The Employees' Provident Fund Organisation's (EPFP) apex decision making body the Central Board of Trustees (CBT) had decided to provide 8.65 per cent rate of interest on EPF deposits last December.
As per the practice, the board's decision is concurred by the Finance Ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income or not.
Once the Finance Ministry ratifies the rate of interest approved by the CBT, it is credited into the account of EPFO members for that particular financial year.
The Finance Ministry had last year also decided to lower the EPF interest rate of 8.8 per cent for 2015-16 decided by the CBT, to 8.7 per cent. The decision had drawn flak from all corners forcing the government to uphold 8.8 per cent.
The Finance Ministry has been asking the Labour Ministry to rationalise the EPF interest rates in view of lowering of returns on various administered saving scheme like PPF run by it.
The government generally ratifies the rate of return approved by the CBT because the EPFO is an autonomous body and provides interest on EPF deposits from its own income.
Asked whether rate of interest on EPF for current fiscal would be lowered amid pressure from Finance Ministry, he said: "Our situation (income earning on investments) is encouraging. We can expect better returns in 2017-18. But the rate of interest for this fiscal will be decided only after working out the income estimates.
Retirement fund body EPFO's subscribers will get loyalty-cum-life benefit of up to Rs. 50,000 at the time of retirement for contributing to the scheme for 20 years or more.
The benefit will also be provided in case of permanent disability even if the members have contributed for less than 20 years, the EPFO board has decided.
The Employees' Provident Fund Organisation's (EPFO) apex decision making body, the Central Board of Trustees (CBT), has recommended a minimum sum assured of Rs. 2.5 lakh in the event of death of a subscriber.
"The CBT has recommended amending the Employees' Deposit Linked Insurance Scheme (EDLI) to provide for minimum benefit of Rs. 2.5 lakh and loyalty-cum-life benefit of up to Rs. 50,000 at a meeting held yesterday," a senior official said.
"The suggested benefits will be available to members after government approval. Initially, these will be provided for two years on a pilot basis and will be reviewed thereafter."
According to the proposal, loyalty-cum-life benefit will be provided to all those members on retirement at 58 or 60 years who have contributed to the scheme for 20 years or more.
The benefit will also be provided in case of permanent disability. In these cases, the members who have contributed to the EDLI scheme for less than 20 years will be eligible.
Those members whose average basic wages are up to Rs. 5,000 will get loyalty-cum-life benefit of Rs. 30,000. Similarly, the members with wages of Rs. 5,001-10,000 Will be eligible for Rs. 40,000 benefit.
All those members getting more than Rs. 10,000 monthly wage will be eligible for Rs. 50,000 loyalty-cum-life benefit under the proposed scheme.
The board has recommended such benefits in view of a huge EDLI corpus of Rs. 18,119 crore following addition of interest that accrued on investment of this fund.
At present, the dependants of the deceased get a sum assured of up to Rs. 6 lakh. There is no provision of minimum insurance and any benefit for surviving members or in cases of permanent disability under the scheme.
Labour Minister Bandaru Dattatreya launched Aadhaar Seeding Application after the meeting. The EPFO has developed this application with support of Common Service Centres (CSCs) and C-DAC.
The CSCs are ICT-enabled front-end service delivery points at the village level for delivery of government and private services.
With implementation of the seeding application, a PF member or pensioner can now walk into any of the field offices of EPFO or CSC outlets with UAN and Aadhaar and seed them.
The EPFO enrolled 49,39,929 workers during January-March 2017. It had launched a special enrolment scheme to cover leftout formal sector workers from January 2017.