1. EPFO may pay 9% interest on PF deposits for 2015-16

EPFO may pay 9% interest on PF deposits for 2015-16

The Employees Provident Fund Organisation's (EPFO) Finance Audit and Investment committee (FAIC) recommended 8.95 per cent interest on PF deposits for the current fiscal in its meeting earlier this week.

By: | Published: January 22, 2016 3:41 PM

 

EPFO ACCOUNT According to EPFO income projections worked out in September, providing 9 per cent interest on PF will result in a deficit of Rs 100 crore. (PTI)

Retirement fund body EPFO may provide 9 per cent interest on PF deposits for this fiscal, which is higher compared to 8.75 per cent provided in previous two fiscals to its over five crore subscribers.

“The income projection of Rs 34,844.42 crore for the current fiscal is expected to be revised upward. Thus the body can provide 9 per cent rate of interest on PF deposits for 2015-16,” an EPFO trustee and Bharatiya Mazdoor Sangh Secretary P J Banasure told PTI.

The Employees Provident Fund Organisation’s (EPFO) Finance Audit and Investment committee (FAIC) recommended 8.95 per cent interest on PF deposits for the current fiscal in its meeting earlier this week.

Banasure, who is also a member of FAIC said:”If the EPFO provides 8.95 per cent interest rate on PF deposits for 2015-16, it will leave a surplus of Rs 91 crore as per income projections worked out in September last year. But the FAIC will meet again later this month to vet the latest income estimate which is likely to be revised upward.”

According to EPFO income projections worked out in September, providing 9 per cent interest on PF will result in a deficit of Rs 100 crore.

“We are expecting that there will be a surplus of Rs 100 crore on providing 9 per cent rate of interest on PF deposits when EPFO will work out the latest estimates. FAIC can change its recommendation in the next meeting and suggest 9 per cent interest rate for 2015-16,” he said.

The proposal has to be endorsed by the Central Board of Trustees (CBT) before the Finance Ministry notifies it.

However, there has been indications from the Finance Ministry that it will slash interest rate on small savings like public provident fund in view of the rate cut by Reserve Bank of India.

The EPFO provides rate of interest from the earning on investments of formal sector workers’ funds without any assistance from the government.

“If EPFO provides rate of interest from its own income and there is no deficit then I don’t think that Finance Ministry should have any problem with that,” All India Trade Union Congress Secretary D L Sachdev said. 

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Tags: EPFO
  1. N
    Narendra M
    Jan 22, 2016 at 2:02 pm
    (1) 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 this news report which says that interest on Employees’ PF for the year 2015-16 may be revised upwards. If both reports are true, the contradiction is obvious. (2) In this context I wish to make one more observation. One cannot understand why the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) is unable to decide the rate of interest payable to Provident Fund subscribers for a particular Financial Year (FY), before commencement of that FY. For example FY 2015-16 commenced on 1st April, 2015. Decision about interest payable for FY 2015-16 should have been taken on or before 31st March, 2015. Thin would avoid a lot of avoidable double work relating to settlement of dues of the subscribers. Suppose, EPFO settles PF dues of a PF subscriber who has retired on 31st October, 2015, it will have to pay interest to him for the period from 1.04.2015 to 31.10.2015 at rate declared applicable for FY 2015-16 but since the same was undecided in October, 2015, EPFO would pay interest at the rate applicable for FY 2014-15 and pay the difference later on. This is sheer waste of EPFO administration’s time and can be avoided by deciding rate of interest for a financial year at the beginning of the year, that is in April every year.
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