Provident fund trustees to press for 12 pc interest

[N.Sukumar]

NEW DELHI: Provident fund trustees will press for increasing the
interest rates on PF to at least 12 per cent to prevent value erosion
of deposits of over 4 crore government and non-government employees in
the wake of soaring inflation.

"We would demand interest rate of something around 12 per cent for the
current year (2008-09)," CITU National Secretary W R Varadarajan, who
is also member of Central Board of Trustees of EPFO said.

When inflation is running amok interest rate should be restored to
2000 level of 12 per cent, he said. Inflation rate was around four per
cent in January 2000.

For the week ended June 7, inflation rate stood at 11.05 per cent.

Presently, the government is paying interest rate of 8.5 per cent on
provident fund deposits.

"If rate is not increased appropriately, it would mean erosion of hard
earned money of crores of investors," Varadarajan said, adding that
the issue of interest rate would be discussed at the next meeting of
Central Board of Trustee scheduled on July 5.

Government reduced the interest rate on provident fund to 11 per cent
in July 2000 and subsequently to 9 per cent in April 2001 citing lower
inflation rate, he said.

Now when inflation is high and the trend is likely to continue for the
most part of year, he said, the board should, in the interest of
employees, recommend restoration of old rate.

The government would face similar demand for increasing the interest
rates on post office savings scheme to provide a positive return on
the saving public.

N.Sukumar
Research Analyst