EPF rate kept unchanged at 8.5 per cent for 2008-09

The Central Board of Trustees of the Employees Provident Fund met here on Sunday pegged the interest rate payable to subscribers for 2008-09 at the existing 8.5 per cent for the third successive week against the trade unions' demand for 9.5 per cent return per annum.

The decision was taken by the newly constituted board which met under the chairmanship of Oscar Fernandes, minister of state for labour and employment and chairman, central Board of Trustees of EPF in New Delhi.

The decision to keep the interest rate at 8.5 per cent for the current financial year has been opposed by almost all major trade union leaders, including the Centre of Indian Trade Union (CITU), All India Trade Union Congress (AITUC), Bhartiya Mazdoor Sangh (BMS), Hind Mazdoor Sabha (HMS) and All India United Trade Union Centre (AIUTUC).

The Employees Provident Fund has more than 44 million subscribers.

The EPF trustees said the fund has been dipping often into the contingency fund to give subscribers a ''reasonable return'' for the past few years. The fund is reported to exhaust with the current pay-out.

EPF has already paid an 8.5 per cent on withdrawals and retiree payments in 2008-09, and that too for a higher amount than in earlier years.

The decision to retain the interest rate 8.5 per cent in the backdrop of the coming general elections is expected to be a severe drain on the economy at a time when the Reserve Bank of India is forcing a downward revision of interest rates – both lending and borrowing – in order to boost consumption.