PIB dated: 15-09-2010

The 190th meeting of the Central Board of Trustees, EPF, which was the eighth regular meeting of the present Board, was convened in New Delhi today. Among the 22 agenda items placed before the Board, it considered a statutory item to recommend rate of interest for the year 2010-2011 for crediting to the subscribers account which was deferred by the Board in the last meeting. After detailed deliberations the Board recommended 9.5% as the rate of interest for the said year, from the surplus located in the interest suspense account.  The Board took two major policy decisions in the meeting. It approved closure of "inoperative accounts". It was decided that such accounts would be closed from an appointed day and no interest would be credited to such accounts after 36 months of inoperation. This would entail closure of nearly 3 crore inoperative accounts with various EPFO offices leading to more efficient accounting in offices. The Board recommended delinking of calculation of assurance benefit with the PF balances payable to family of employees who die while in service under the EDLI Scheme, 1976. It would be now calculated at 20 times the average monthly wages drawn by the deceased employee in preceding 12 months of service. The maximum benefit payable to the families of EPF subscribers on their death in service would be Rs. 1.30 lakh. This would benefit the families of employees who die in harness.  The Board also approved the process of appointment of new consultant for initiating appointment of new fund managers to manage EPFO portfolio after 31.03.2011.  The Board discussed the directions of Ministry of Finance on revised investment pattern to be followed by the CBT with regard to EPF corpus. The employees' representatives were concerned about the safety & security of the funds which was primary consideration apart from the returns. Some of the employers' representatives supported investment of some corpus in capital market. It was decided that the matter will be appropriately taken up with Ministry of Finance on the issue of guarantee of safety of capital and a minimum return.  The Board also discussed the report of the Expert Committee on comprehensive review of the Employees Pension Scheme 1995. The matter was deferred for further deliberation in future.  The Union Minister of Labour & Employment, Shri Mallikarjun Kharge chaired the 190th Meeting of the Central Board of Trustees (Employees' Provident Fund). Shri Harish Rawat, Minister of State for Labour and Employment and Vice Chairman CBT, EPF, was also present. CBT discussed all 21 items placed before the board and decided to recommend the Rate of Interest to be credited o EPF members' accounts for the year 2010-11 at 9.5 percent. Talking to the Media persons after the meeting Shri Mallikarjun Kharge said that the CBT want the PF money of the about 5 Crore workers to be safe and secure and invested in a manner to provide good return on their accounts. The rate of interest on EPF has been pegged at 8.5 % for the last five years from 2005-06 to 2009-10. Although the decision to provide 9.5 per cent interest rate would result in a deficit of about Rs 1,600 crore, the same would be made good by a surplus of Rs 1,731 crore in the interest account of the EPFO.

Rate of interest change for employee provident funds announced, altering credited returns and funding approach for the benefit year. The Central Board of Trustees recommended increasing the rate of interest to be credited to members' EPF accounts for 2010-11 to 9.5 percent from surplus in the interest suspense account. It approved closure of inoperative accounts by ceasing interest after thirty-six months of inactivity, recommended delinking EDLI assurance benefit from PF balances and fixing it at twenty times the deceased employee's average monthly wages (subject to a maximum), initiated steps to appoint a consultant for new fund managers, discussed investment pattern and fund safety with the Ministry of Finance, and deferred review of the Employees' Pension Scheme.