Over five crore provident funds (PF) subscribers would get 8.5% interest for their deposits for 2012-13, higher than 8.25% disbursed in the previous financial year.
After a board meeting of EPFO's apex decision making body the Central Board of Trustees (CBT), Labour Minister Mallikarjun Kharge told reporters, "The board discussed the rate of interest for 2012-13. After detailed discussion, the board decided to recommend a rate of interest of 8.5% for the year."
The minister said that the decision to pay 8.5% interest rate was taken unanimously by the board, which also has representation from trade unions and employers.
The trustees also decided that EPFO will give a permanent account number to all members so that it is not changed with change in job or location. The EPFO is ready with an action plan to set up a central database for the purpose.
"Once implemented, it will ensure that the EPFO is able to offer almost real time and seamless service....it will also eliminate much of claims settlement workload", Kharge said.
The CBT, the minister said, has also decided to adopt the pattern of investment of 2008 as issued by the Finance Ministry except that no investments shall be made in equity.
Under, 2008 investment pattern norms, the Employees' Provident Fund Organisation (EPFO) will have greater flexibility to park its surplus funds in long-term debt instruments and certificate of deposits of PSU banks.
"A decision has been taken to pay 8.5% interest on PF deposits ... but we have expressed our reservations as we wanted higher interest rate," said DL Sachdev, secretary All India Trade Union Congress (AITUC) after the CBT meeting.
According to the EPFO's estimates, payment of 8.5% interest rate on PF deposits for the ongoing fiscal would leave a surplus of Rs 4.13 crore.