EPFO trustees to pay 8.75% interest on PF deposits for 2014-15

New Delhi: Retirement fund body EPFO’s trustees today decided to retain interest payment on provident fund deposits for 2014-15 at 8.75 percent.

“It has been decided to pay 8.75 percent interest in the current fiscal,” Central Provident Fund Commissioner (CPFC) K K Jalan told PTI after the meeting of the Central Board of Trustees (CBT), the apex decision making body of the Employees’ Provident Fund Organisation (EPFO).

The EPFO has about 5 crore subscribers and the decision will have a bearing on their retirement fund.

The decision to retain the interest rate on the provident fund deposits at last year’s level was taken despite some protest by the trade union members of the CBT, sources said.

The final notification for payment of the interest rate for the current fiscal will be issued by the Finance Ministry later.

The EPFO had provided 8.75 percent rate of interest on PF deposits for 2013-14, which was higher than 8.5 percent paid for the previous fiscal.

After Crisil is appointed as consultant, it would take at least three months time to appoint fund managers for EPFO.

According to an official statement, during the meeting the proposed pattern of investment by Finance Ministry was discussed by the CBT and the Board was not in favour of investing in equities and Exchange Traded Funds (ETFs).

It was decided to recommend for making the pattern more flexible to further increase the percentage of investment in government securities.

The Board also discussed the feasibility of deployment of funds in AAA rated Central/State Public Sector Undertakings.

Without giving details about specific proposals, the Labour Minister said that board decided to set up a PSU cell within its Investment Monitoring Cell (IMC) to negotiate with primary issuers (of bonds) on behalf of all fund managers.

State-run NTPC has made a proposal seeking an EPFO investment of Rs 10,000 crore in its secured non-convertible bonds under a long term agreement from 2014-15.

The trustees also decided to go in for short term (not exceeding 15 days) borrowing of funds for participation in primary auction of securities.

This move is expected to result in EPFO getting to invest in securities at more profitable rates. The funds would be borrowed by means of CBLO, Corporate Term Repo and other such instruments for participation in primary auction of government securities and corporate bonds.

The board also decided to constitute a sub committee for construction and contract workers. The Committee shall examine the various issues regarding the coverage of employees engaged in this sector and shall recommend strategies to widen the coverage and enrollment in this area.

Board was told that SBI has reduced its service charges for collecting PF contribution to Rs 1.80 per Rs 1,000 for net based transaction and Rs 2.40 per Rs 1,000 for physical transaction form the existing uniform rate of Rs 3.

It is expected that this reduction in rates shall result in substantial savings to the tune of around Rs 100 crore per annum for the EPFO.

PTI