Trade Unions called upon people to condemn the Employees’ Provident Fund Organisation (EPFO) decision to reduce EPF deposit’s interest rates to 8.1 percent which is the lowest rate in over four decades. The All India Trade Union Congress (AITUC) called for widespread protest against this during the all-India strike on March 28 and March 29, 2022.
On March 12, the Labour and Employment Ministry called a meeting of its Central Board of Trustees wherein Minister Bhupendra Yadav and other ministers recommended an 8.10 percent annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2021-22.
According to a department press release, the interest rate recommended is a result of combined income from interest received from debt investment and income realized from equity investment.
“This enabled EPFO to provide a higher return to its subscribers and still allowed EPFO with a surplus to act as a cushion for providing a higher return in the future also. There is no over-drawl on the EPFO corpus due to this income distribution,” said Yadav in the statement.
Further, he said the EPFO’s assured fixed return approach, announced by CBT every year along with the tax exemptions, makes an attractive savings option for PF members. However, the AITUC argued that reducing the interest rate amounts to reducing the protection offered by PF accumulations in old age. This will affect all senior citizens who depend on the interest on their savings to support themselves.
AITUC General Secretary Amarjeet Kaur said, “All employee representatives in the Central Board of Trustees demanded continuation of 8.5 percent as the rate of interest on accumulations in employees’ accounts for the [financial] year ending March 31.”
The Ministry said that EPFO has been able to give a higher rate of interest on retirement savings in comparison to other available investment options because it invested in long tenure high yielding securities for the past several decades. This ensures that the returns on EPFO’s investments are higher even when the yields have been steadily coming down in the past decade.
Still, trade unions pointed out that the government needs to contribute to social security funds and take care of various sections of people like the farming community and unorganised sector workers.
“No amount of playing around with financial markets will help the crores of toiling people, who are rightfully demanding their share in the National Wealth, which they alone produce,” said Kaur. She said that the government will be abdicating its responsibility to provide social security to industrial workers and leave them to “the vagaries of financial markets”. Therefore, the AITUC rejected the so-called actuarial calculations put forth by the Ministry to justify the reduced interest rate.
While the Labour Ministry agreed to form a committee with representatives of employees to look into the aforementioned calculations, the trade union warned that the recommendation for an 8.1 percent interest rate will be forwarded to the Finance Ministry.
The union will demonstrate against this amidst decrials of the four labour codes and other pro-corporate policies pushed by the government recently.
Related:
Who will put the Genie of Communalism back in the bottle, and how?
CEL sale, a threat to national security: Employees
AIFAP voices support for pan-India strike against Electricity (Amendment) Bill
Letter from Central Trade Unions to the Indian Prime Minister, Narendra Modi