PF interest rate raised to 8.8%

PF interest rate raised to 8.8%

A decision to this effect was taken by the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation in a meeting held at New Delhi on Tuesday.

Subscribers to employees’ provident fund will get a return of 8.8% for the current financial year, marginally higher than in the past two years, when the interest rate was 8.75%. A decision to this effect was taken by the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation in a meeting held at New Delhi on Tuesday.

AITUC’s national secretary D L Sachdeva said the labour ministry did not favour raising the rate to 9% as demanded by the unions as gthe CBT was keen to retain the surplus — Rs 670 crore if the EPF rate is 8.8% — keeping in mind that the EPFO’s income from its investments might be less next year given a likely softening of interest rates. Unions, including RSS-affiliated Bhartiya Mazdoor Sangh (BMS) recorded their “protest” against CBT’s decision.

CBT, whose members include, representatives from the government, employers and employees, would now forward its recommendations to the finance ministry which would notify the rates for the current fiscal. Labour and employment minister Bandaru Dattatreya is the head of CBT.

Though EPFO provides the rate of interest from its earnings on investment on formal sector workers’ fund without any assistance from the government, the finance ministry was not in agreement with the idea of raising the rates since it would have a lot of bearings on other savings schemes as well as it has already decided to moderate rates on small savings with effect from April 1.

The income projection of the retirement fund body is upwards of Rs 34,844 crore for the current fiscal. The Finance Audit and Investment Committee (FIAC) of the EPFO had last month recommended for a 8.95% rate of interest on PF deposits for the current financial year. According to FIAC’s estimates, the retirement fund body would still have Rs 91 crore surplus available with 8.95% interest pay out to its subscribers, Rs 673 crore with 8.8% pay out and Rs 479 crore with 8.85% pay out.

Source : gconnect