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EPF board may seek govt help

March 03, 2005 15:08 IST

Faced with an additional burden of an estimated Rs 927 crore (Rs 9.27 billion) due to hiked interest rates, the Employees Provident Fund board will meet on March 20 to decide on whether it should approach the Finance Ministry for help.

The issue is expected to come up at the meeting being held after Finance Minister P Chidambaram announced the hike in EPF rate to 9.5 per cent from an "interim" 8.5 per cent, as suggested by the trustees, which manage about Rs 1,28,000 crore (Rs 1280 billion) corpus of workers' savings.

The CBT had met on Feburary 21 but could not take up the issue owing to elections in certain states.

It, however, appointed global consulting firm Mercer for advising on more lucrative investment strategies, including parking funds in equities and postal deposits, much to the displeasure of left trade unions.

The consultant is expected to submit the report within four months. After a recent meeting with Prime Minister Manmohan Singh on the issue, Labour Minister K Chandrasekhar Rao had said the EPFO will strive to meet the deficit from its coffer and if it cannot bridge the gap, the Finance Ministry will have to chip in to provide necessary support.

The trustees, meeting for the eighth time after the UPA government came into power, may also consider restricting the withdrawals before retirement and measures to contain the widening valuation deficit in its pension scheme.

EPFO's total corpus of about Rs 1,28,000 crore include Rs 71,000 crore (Rs 710 billion) of the EPF, Rs 52,000 crore (Rs 520 billion) of the Employees Pension Scheme and Rs 4,000 crore (Rs 40 billion) Employees Deposit-linked insurance.

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