Good news, EPFO may offer more than 8.5% interest this year
Retirement fund body EPFO may announce higher interest rate on provident fund deposits for its over five crore subscribers in the current fiscal than 8.5 per cent that was provided in 2012-13.
New Delhi: Retirement fund body EPFO may announce higher interest rate on provident fund deposits for its over five crore subscribers in the current fiscal than 8.5 per cent that was provided in 2012-13.
"The rate of return on PF deposit for Employees' Provident Fund Organisation (EPFO) subscribers for this fiscal would be slightly higher than 8.5 per cent provided last year," a source said. He said payment of rate of interest slightly higher than 8.5 per cent will leave no deficit and no surplus for EPFO.
EPFO had paid 8.5 per cent interest rate to subscribers in 2012-13, which was higher than 8.25 provided in the 2011-12 fiscal. It had paid 9.5 per cent rate of return for 2010-11 when it found over Rs 1,761 crore in its books of accounts.
The body is in the process of calling a meeting of its apex decision making body, the Central Board of Trustees (CBT) headed by the Labour Minister, to approve the interest rate. During the meeting, the trustee would reconstitute the EPFO's advisory body -- Finance and Investment Committee (FIC), which recommends the rate of interest to the CBT.
After the reconstitution of CBT by EPFO in June, the other sub-committees of EPFO like FIC, were dissolved and were required to be reconstituted. As per the practice, the EPFO would have to place the proposal before FIC after which it is considered by the CBT for taking a final call on the matter.
Once approved, the proposal is to be put before the Finance Ministry for its concurrence.
According to the sources, the interest rate on PF deposits for this fiscal may be announced before Diwali. However, as per the practice, the body has to announce the rate of return before the beginning of a financial year. But this has not happened in the past many years.
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EPFO's decision comes amid speculation that the rate of interest would be lowered for this fiscal, in view of more withdrawals and less contribution from members due to COVID-19 pandemic
New EPFO enrolments have grown to 12.54 lakh in December 2020, a staggering 24 percent rise when compared to the same month for the year 2019