Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Good news for subscribers, Provident Fund deposits likely to fetch higher rate of returns

Jul 16 2014, 12:38 IST
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At present, 24 pct of an employees' basic salary with a cap of Rs 6,500 per month is mandatorily deposited with the EPFO. At present, 24 pct of an employees' basic salary with a cap of Rs 6,500 per month is mandatorily deposited with the EPFO.
SummaryUnion Budget on July 10 had announced the hike in Provident Fund contributions limit.

Provident Fund (PF) deposits are likely to fetch a higher rate in FY15 but a decision on the return is expected to be delayed because of the plan to increase the mandatory contribution limit to Rs 15,000 per month. “The calculations are yet to be firmed up but efforts are on to ensure that the returns are higher than the 8.75 per cent announced for last fiscal,” said a senior official.

But the Employees’ Provident Fund Organisation (EPFO) will have to review its estimates once the higher wage limit is notified.

“Based on when the notification is issued, contributions for PF, the overall corpus as well as ensuing investments will register a huge rise. So we will have to re-assess the interest rate that can be given this fiscal,” said another official, adding that a final call will be taken later this year.

Meanwhile, the EPFO is also in talks with the finance ministry to withdraw its investments from the Special Deposit Scheme, which could boost the interest rate on provident fund deposits by at least 0.15 per cent.

“Discussions are still on for exiting the SDS,” said the second official.

The Union Budget 2014-15 on July 10 had announced the hike in PF contributions limit as well as a minimum assured pension of Rs 1,000 per month to subscribers of the related Employees’ Pension Scheme (EPS).

At present, 24 per cent of an employees’ basic salary with a cap of Rs 6,500 per month is mandatorily deposited with the EPFO or exempt PF trusts. But the wage limit was set way back in 2001 and has pushed out many workers out of the social security net since minimum wages in most states is much higher.

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