The Finance Ministry on Friday backtracked from its attempt to lower the payout on Employees’ Provident Fund (EPF) savings for 2015-16 to 8.70 per cent, after a week-long tussle with the Labour Ministry, which had announced 8.80 per cent returns.
This marks the third time, in little over 50 days, that the government has rolled back contentious policy decisions pertaining to retirement savings of the working class.
“The Finance Ministry has agreed and we will be issuing orders for 8.8 per cent interest rate to all employees as early as possible. Ultimately, (following) two rounds of meetings they are fully convinced and we are going ahead with the Central Board of Trustees recommendation,” Mr. Dattatreya said.
He added that the labour ministry will “immediately” notify 8.80 per cent interest rate to EPF subscribers.
Conceding that there was an “understanding gap” on the EPF rate within the government, Union Labour and Employment Minister Bandaru Dattatreya said that there were two reasons behind the Finance Ministry’s push for lowering the EPF rate.
The Finance Ministry had asked the EPFO to keep a surplus of over Rs 1,000 crore to give interest to inoperative EPF accounts that were not getting interest credits since 2011.
