IFTU Opposes Effective Cut in EPF Interest Rate

The EPFO has recommended that the pay-out of 8.5% of interest for 2019-20 will be made in two installments. The first one will be 8.15% that would accrue from debt income and the second one of .35% will be made in December depending upon capital gain accruing from the sale of exchange trade funds. This is highly objectionable as part of the employees’ provident fund is now tagged to fluctuations in the market. If there is no capital gain then .35% of interest share of the EPF is lost. As it is, the economic scenario is grim with the economy sliding into negative growth and to put a portion, that is 0.35%, of the EPF into some kind of a gamble is to deny the employees that much interest share. Economists of various shades say that there is demand depression and in this context to expect capital gains from the sale of ETF is deceptive.

We already have the bad experience of pumping EPF into private businesses. The EPFO invested some 18 lakh crores in the market of which 45 thousand crores was put as investments in DHFL, IL&FS and the former went bankrupt. The employees’ provident funds should not be subjected to market gamble. The National Committee of IFTU demands the immediate roll-back of the recommendation to link .35% of EPF interest to capital gain on the sale of exchange trade funds.

Aparna                                                                                                            Pradeep
President                                                                                                  General Secretary

September 10, 2020