The finance ministry has approved 8.7% interest on Provident Fund (PF) deposits for over 5 crore subscribers of retirement body Employees’ Provident Fund Organisation (EPFO), lower than 8.8% decided by the Central Board of Trustees (CBT).
“The (EPFO’s apex decision-making body) CBT, at its meeting held in February 2016, has proposed an interim rate of interest at 8.8% to be credited to the accounts of Employees’ Provident Fund (EPF) subscribers for 2015-16. The ministry has, however, ratified an interest rate of 8.7%,” labour minister Bandaru Dattatreya said in a written reply to the Lok Sabha on Monday.
This is probably the first time that the finance ministry has not given concurrence to the rate of interest on EPF as decided by CBT, which is headed by the labour minister.
EPFO had provided 8.75% rate of interest in 2013-14 and 2014-15, which was higher than 8.5% in 2012-13 and 8.25% in 2011-12.
EPFO’s estimates, which were worked out in September, projected that the body can easily pay 8.95% rate of interest as it would leave a surplus of Rs 100 crore.
The EPFO pays rate of return to its subscribers on the basis of returns it generates from its investments.
However, despite the employees representatives’ demand for 9% rate of interest for the fiscal, the CBT at its meeting held on February 16 decided to provide an interim interest rate of 8.8% for 2015-16.
Later, Dattatreya had assured that the EPFO will not revise its interim interest rate of 8.8% downward for 2015-16.
“We will not revise it (interim interest rate) downwards. The revision will be keeping in view of the economic trend in the country, interest rates of various schemes as well as the 7th Pay Commission,” Dattatreya had said.
Asked about the interim announcement, he had said the prevailing situations need to be analysed and after that, CBT will again meet in future to decide the interest rate.