The Central Board of Trustees of the EPFO, which met yesterday failed to take a decision on the interest rate of EPF for the year 2011-12, due to differences between the government, employers and the employees. The Advisory Body of EPFO, Finance and Investment Committee (FIC) had suggested 8.25% interest for 2011-12, stating that more than that will not be possible as per the present financial situation of the EPFO. The employers were in support of the same.
The representatives of the Unions strongly contended this and demanded that like last year it should be 9.5%. They pointed out that the interest on the inoperative accounts coming to hundreds of crore rupees be transferred to active subscribers and also pointed out the estimated error, which if corrected, will get more % for the interest rates. They also pointed out that how can EPFO pay less than the 8.6% interest which is offered by the government unde the Public Provident Fund Scheme(PPFS). No decision could be taken in the meeting in view of the sharp differences. The issue may now be referred to the Finance Ministry.
The trade Unions can not agree for a reduced % of interest when the interest rates on borrowings, deposits are increasing. The present proposed cut is one more attack on the hard earned money of the workers. It has got to be resisted.
VAN Namboodiri's Blog 
Nationalized banks are paying interest rates varying from 9.50 to 10% per annum compounded quarterly on Fixed deposit for 1 year which is even more for senior citizens.
How can the interest be less than 9.5 % ,.
Amount of 90%-balance(about Rs 20 lacs ) which can be withdrawn 1 year prior to retirement was not withdrawn simply because rate of interest was 9.5% was almost same as interest rate .Why should I lose about Rs 20000 by proposed cut in rate ?
Any comments/explanation is welcome.
I am retiring on 31/03/2012 .I did not apply for withdrawal -90% of balance one year earlier as rate of interest -deemed was same as for the year 2010-11 ie 9.50%per annum .This was almost same as given by nationalized banks on FDR for one year.
i have submitted the Form for withdrawal of 90%, last week with local EPF authorities.
Logic demands that interest rate of 9.5& must be given on my deposits even if it is reduced .
Kindly suggest .
Till now, the EPFO has not yet finalised the interest rate for 2011-12. Since there was difference amongst the members, it is going to be referred to the Finance Minitry and the decision of the ministry will be final. But the chances are that the demand of the unions for 9.5% may not be agreed. Whatever is the decision of the Finance Ministry will be implemented. Unions, including ours have strongly protested the move to reduce the interest rate.