The labour ministry has said that all private provident fund trusts have to compulsorily match the interest rate of 9. 5% declared by the employees provident fund organisation (EPFO ) for the ongoing fiscal as it was one of the conditions for the exemption given to them.
"They have no option. They have to give 9. 5% interest this year, "labour secretary P C Chaturvedi told . If they cannot do so, their exemptions will be canceled, he said. The EPFO declared a 1% higher interest for 2010-11 based on Rs 1, 731-crore surplus fund discovered in its interest account that had accumulated over the years and had not been credited to subscribers accounts. A number of employers, led by the employers federation of India, opposed the decision on the ground that they did not have reserves left to fund the gap between their expected earnings of 8. 5% and the 9. 5% rate.
The labour ministry has agreed to examine the accounts of the 40 private provident fund trusts surveyed by employers organisations which they claim cannot afford to pay out 9. 5% interest. The purpose behind the exercise, however, is not to allow them to pay a lower interest rate, but to find out why their finances are in a bad state. "We have asked our field officers to carry out a study which will also tell us how these private trusts are managing the funds, "Mr Chaturvedi said. The ministry wants to examine whether these funds have been actually earning lower interest rates than that declared by the EPFO over the years and if that is the case then are they in a position to continue maintaining these accounts. "The idea behind allowing companies to manage their own provident fund money was to give them an opportunity to earn higher interest rates for their workers. If that is not the case, then the entire idea is defeated, "Mr Chaturvedi said. There are about 2, 750 establishments, which include companies like Tata, HCL, Wipro, Coca Cola and L&T, that manage their own EPF accounts and are exempt from the supervision of the EPFO. But, they have to follow investment norms laid down by the EPFO and also have to match their interest rates. The private trusts have an estimated 48 lakh subscribers and a corpus of over Rs 1 lakh crore