1. EPFO likely to retain interest rate at 8.75% for current fiscal

EPFO likely to retain interest rate at 8.75% for current fiscal

EPFO has been paying 8.75% interest rate for the last two fiscals to its 5 crore organised sector subscribers. Retaining of the rate for the third year in a row might face resistance from the central trade unions, who are pressing for a 9% returns for the current fiscal.

By: | Updated: February 16, 2016 6:58 AM
epfo, epf India, epfo news, provident fund, employees provident fund organisation, stock markets, stock markets in india, Central Board of Trustees EPFO provides the rate of interest from its earnings on investment on formal sector workers’ fund without any assistance from the government. (Reuters)

The Employees’ Provident Fund Organisation (EPFO) is likely to retain the rate of interest at 8.75% for provident fund deposits for the current fiscal, sources in the labour ministry said.

EPFO has been paying 8.75% interest rate for the last two fiscals to its 5 crore organised sector subscribers. Retaining of the rate for the third year in a row might face resistance from the central trade unions, who are pressing for a 9% returns for the current fiscal.

However, a final decision on this would be taken at a meeting of the Central Board of Trustees (CBT), the apex decision-making body of the EPFO, tomorrow in Chennai. The CBT includes representatives from the government, employers and employees.

Sources said that the rates would most likely to be retained at the previous two years’ level considering the government’s proposal to bring down the rates of small savings with effect from April 1 to allow banks to reduce their lending rate in tandem with rate cuts by the Reserve Bank.

EPFO provides the rate of interest from its earnings on investment on formal sector workers’ fund without any assistance from the government. The income projection of the retirement fund body is upwards of R34,844 crore for the current fiscal. At this, EPFO would not have any problem to raise the rates to even 9% considering that it would still have R100-odd crore surplus.

Sources, however, said the finance ministry is not in agreement with the idea of raising the rates since it would have a lot of bearings on other savings schemes as well. The Finance Audit and Investment Committee of the EPFO had earlier recommended 8.95% rate of interest rate on PF deposits.

Tags: EPFO
  1. A
    Ashish
    Feb 16, 2016 at 4:37 am
    Fixed deposits are most risky financial product in the long run. It is heavily taxed and post tax returns are less than inflation rate. So sure shot loss of wealth. Visit prudentcap dot in to explore more .
    Reply
    1. N
      Narendra M
      Feb 16, 2016 at 7:12 am
      On the one hand, there was a news report which said that the Union Finance Ministry is considering a cut in interest rates on national saving schemes, post office deposits and public provident fund. On the other hand there is this news report which says that interest on Employees’ PF for the year 2015-16 may be retained at 8.75 per cent per annum though trade unions want that to be revised upwards. EPFO invests a major portion of its investible surplus in a Special Deposit Scheme of the Central government. It is almost a perpetual scheme. But question is how can the Union government think of reducing interest on national savings schemes? While not reducing PF interest?
      Reply

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