EPFO to hike interest to 8.5% this yr

New Delhi: The Employees Provident Fund Organization on Monday agreed to increase interest rates paid to subscribers to 8.5% during the current financial year, compared to 8.25% last year. But it remains lower than what trade unions were demanding for the EPFO's five crore subscribers. 

    Although there were suggestions that the EPFO should pay 8.6%, its calculations showed that it would be left with a deficit of over Rs 240 crore if it agreed to the proposal. At 8.5%, it will have a surplus of a little over Rs 4 crore. 
    The Central Board of Trustees' recommendation will need to be notified by the finance ministry before the actual payouts begin. 
    Trade unions have accepted the new rate of 8.5% under protest. Unions reject 
    plan to park EPFO funds in stock markets 
New Delhi: Trade unions have accepted the EPFO's 8.5% interest rate for this financial year, but are not very happy. "When banks pay 9-10% interest on fixed deposits and the government pays 8.8% on public provident fund accounts, why is it paying only 8.5%?" said Pawan Kumar, organizing secretary of the Bharatiya Mazdoor Sangh, and a trade union representative on the CBT. The 8.25% rate fixed for 2011-12 was a substantial decline from the previous year's 9.5%. 
    At Monday's meeting, union representatives, however, had their way on stock market investment by the entity and shot down a proposal by the finance ministry to allow EPFO to park funds in the equity market. "We have strongly rejected any attempt to link EPF funds to the stock market," Kumar said. TNN