April 3: Private provident fund trusts have enough surplus to be able to pay over 9.5 per cent interest on PF deposits, says an analysis by the Employees’ Provident Fund Organisation’s (EPFO). Some of the private PF trusts have sufficient funds to pay interest of up to 11.5 per cent on the retirement funds of their employees, the analysis said.
The EPFO sought details of the private funds after they expressed difficulty in paying the higher interest of 9.5 per cent on PF deposits for 2010-11. The private funds have argued that EPFO could pay 9.5 per cent interest because it had a surplus of Rs 1,731 crore in its interest suspense account, but they could not do so in absence of any such surplus. The PF trusts are required to mandatorily match the interest rate on provident fund provided by EPFO. EPFO, which has been providing 8.5 per cent rate of return to its 4.72 crore subscribers since 2005-06, decided to increase it to 9.5 per cent for 2010-11.
An EPFO trustee, Mr Sharad Patil, who is also the secretary general of the Employers’ Federation of India, had presented the findings of a survey of PF trusts to the labour ministry, which revealed that only 2 of 42 trusts surveyed could afford the payout of 9.5 per cent rate of return for 2010-11.
However, the EPFO conducted the analysis of 12 of these 42 trusts in the Patil survey, and the analysis found that only Tata Chemicals Ltd provided accurate information about the surplus of Rs 264 lakh lying in its accounts. On the other hand, the information regarding surplus money with the remaining 11 trusts was not correct. According to Patil’s submission, Cipla Ltd had no surplus money in their account, but EPFO found that it has a surplus of Rs 342.1 lakh.
This surplus is sufficient to maintain additional interest payout as high as 3 per cent over the 8.5 per cent for 2010-11. Siemens Ltd is another employer who can maintain additional payout of 2.70 per cent because it has a surplus of Rs 971.84 lakh.