The Hindu Business Line : For 2 lakh retired people the wait gets longer

New Delhi March 10 For the fourth time since November last year, the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) was unable to take a decision on the interest rate payable for fiscal 2006-07 on provident fund deposits, thus practically leaving in lurch more than two lakh people who have retired during the current financial year.

The CBT met here on Saturday to decide on the interest rate and deferred a decision till it meets again in the last week of this month after the first half of the Budget session is over.

Employees who have retired in the meanwhile have not been paid their dues for the period falling in 2006-07. This is a departure from the earlier practice when an interim interest rate was paid based on the rate notified for the previous year.

During 2004-05 and 2005-06 too, the CBT took time to decide on the interest rate but the accounts of the employees who retired during the interim period were settled on the basis of the previous year's notified rate of interest.

Objections raised

For this year, sources in the CBT said no payment was made because of the objections raised by the Government representatives on the board. As a result, persons who retired from April 1, 2006 onwards have not received their dues for the number of days worked in the current fiscal. Their accounts have been settled up to March 31, 2006, CBT members said.

"The trade union representatives in the CBT had suggested that like the earlier years, the accounts of retiring workers be settled on the basis of 8.5 per cent interest rate but the Government representatives raised objections," Mr D.L. Sachdev, Secretary of the All India Trade Union Congress (AITUC) and a member of the CBT, told Business Line. In the CBT, one-third of the members are representatives of the central trade unions, one-third represent various employers' organisations and the rest are Government representatives.

"On paying an interim amount of 8.5 per cent, the Government representatives argued that in case the final decision was to pay 8 per cent interest for 2006-07, then the extra amount of 0.5 per cent would be difficult to recover. Moreover, since this amount would have already been paid out, the earnings of EPF corpus would be correspondingly lower for the next fiscal," Mr Sachdev said.

Minister's request

Surprisingly, at Saturday's meeting, the Labour Minister, Mr Oscar Fernandes, who is also the Chairman of the board, requested the members to postpone the final decision till a later date. In all earlier meetings, it was pressure from the labour leaders that led to deferment of decision. The Minister told the members that his discussions with the Finance Ministry on providing additional funds to meet the demands made by the trade unions were still on and the next meeting would be convened shortly.

With bank interest rates now going up, the EPFO has come under additional pressure this year. The argument from the labour side is that while banks were offering up to 9.5 per cent interest for term deposits of five years and above, the EPFO was offering only 8 per cent whereas its funds are parked for long tenures of as much as 30-35 years. Since the EPFO had reduced interest rates in recent years on the ground that bank rates had come down, the same argument is now being put forward by labour representatives.

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