What's sauce for the goose is not always sauce for the gander. While the Employees' Provident Fund Organisation is talking of giving a bonus, corporate India might well have to dip into its reserves to meet the shortfall to match the administered 9.5 per cent rate on provident funds.

The EPFO, unlike most other government organisations, is perhaps one of the most profitable in the country.

It has come to riches mainly on account of the hefty levy it imposes on corporate India for administrating or inspecting their provident funds.

In a low interest rate environment when there is talk of corporate India having to dip into reserves to meet shortfalls to match administered interest rates, the EPFO is talking of offering a bonus of 0.5 per cent.

According to the latest available EPFO annual report for 2000-01, the corporation's reserves swelled by a hefty Rs 183 crore (Rs 1.83) to Rs 597 crore (Rs 5.97 billion). This was reflected in EPFO's revenue surplus account, which is kept distinct from the investment account.

Corporates are not clamouring to transfer their funds to the EPFO to administer primarily on account of the additional hefty charges the latter levies and the poor service it renders.

Unfortunately, corporates have little choice in the matter. In the last two years, despite hundreds of applications pending, the EPFO has only granted exemption to one corporate to set up its own trust for managing employee provident funds.

With a hefty amount to lose, it is obvious why the EPFO, which is both administrator-cum-regulator for the sector, has not opened up of this sector to competition.

Today there are just 3,000 exempted funds managing a little over Rs 1,30,000 crore (Rs 1,300 billion) in funds. In the process, the regulator has been minting money at the expense of corporate India by levying hefty administration and inspection fees.

According to the balance sheet, these levies have been utilised to pay employee salaries, and other related expenses. The balance is then put into the revenue surplus account.

In most other countries, professionals managing such funds charge just about 0.75 to one per cent of the total contribution. This is significantly less than the 4.5 per cent (effective) rate levied by the EPFO.

The OASIS report had recommended a levy of just 0.25 per cent. In 2000-01, the EPFO got a sum of Rs 420 crore (Rs 4.2 billion) from unexempted funds, which are managed directly by the organisation, and Rs 38 crore (Rs 380 million) from exempted funds, which are managed by corporates themselves.

The EPFO charges 1.1 per cent of gross wages (basic salary plus dearness allowance) as fees for administering the unexempted funds. This effectively works out to 4.5 per cent of the annual contribution deposited by the employer with the EPFO.

In the case of exempted funds, the EPFO still manages to get a share of the game by levying what it terms as 'inspection' charges.

This is levied at 0.18 per cent of gross wages, effectively working out to 0.75 per cent of the annual contribution. There are 3,000 exempted funds in the country.

From the total sum garnered from corporates as administration or inspection fees in 2000-01, the EPFO spent Rs 200 crore (Rs 2 billion) towards employee salaries, another Rs 60 crore (Rs 600 million) for recurring charges, Rs 50 crore (Rs 500 million) as provision for construction fund and Rs 1.4 crore as provision of maintenance account etc.

At the end of all these allocations, the EPFO made a handsome profit of Rs 183 crore (Rs 1.83 billion).

Distinct from the investment account, the revenue account had till fiscal 2001 not been touched to make any further payments. At that point in time, a sum of Rs 597 crore (Rs 5.97 billion) was lying in these reserves.

The EPFO has been minting money from corporates by levying these charges. This means that the employer contributes 12 per cent of wages towards an employee's provident fund, thereby matching the employees' contribution.

In addition, it also pays an effective 4.5 per cent fee to the EPFO for administrating the funds. Prior to 1998, the organisation used to charge 0.65 per cent of the gross wages for unexempted funds, and 0.09 per cent of gross wages for exempted funds.