Retirement fund body EPFO likely to announce interest rate today
Retirement fund body EPFO is likely to announce interest rate on provident fund deposits for the current fiscal year at its trustees’ meeting on Tuesday.business Updated: Nov 24, 2015 10:59 IST
Retirement fund body EPFO is likely to announce interest rate on provident fund deposits for the current fiscal year at its trustees’ meeting on Tuesday.
“The proposal for fixing rate of interest on PF deposits for 2015-16 is likely be discussed and approved in the 209th meeting of EPFO’s Central Board of Trustees (CBT) on November 24, 2015,” a source told PTI earlier this month.
The Employees’ Provident Fund Organisation (EPFO) had provided 8.75% interest on PF deposits for 2013-14 and 2014-15.
Speculation are rife that interest rate on savings schemes can come down in view of interest rate cuts by the Reserve Bank of India earlier this year.
Lowering of interest on rates on savings scheme will help government to nudge banks to bring down lending rates.
After RBI cut interest rate by half a percentage point in September end, finance ministry had said that it will review rate of interest on small savings scheme.
These schemes include post office Monthly Income Scheme (MIS), Public Provident Fund (PPF), Post Office Time Deposit Scheme, Senior Citizen’s Savings Scheme, Post Office Savings Account, and Sukanya Samriddhi Accounts.
“It has also been decided that the government will undertake a review of small saving interest rate also,” economic affairs secretary Shaktikanta Das had said.
However, fixing the interest on EPF depends on the EPFO’s apex decision making body CBT headed by the labour minister as the body provides rate of return from its own income.
Once the rate of interest is decided and announced by the CBT, it is sent to the finance ministry for concurrence. The latter approves the proposal if EPFO has sufficient income to provides the proposed rate of interest on PF from its income during the year without any shortfall.
After the approval of finance ministry, the rate of interest is notified and credited to the accounts of over five crore subscribers of the body.
Apart from rates of interest, the CBT may also take up two separate proposals to allow its subscribers to pledge their future PF contribution to buy low cost houses and to reduce administrative charges from 0.85% to 0.65% of basic wages.
These two proposal for housing and reduction of administrative charges paid by employers were on agenda for discussion in last meeting of CBT held on September 16.
EPFO had reduced the administrative charges from 1.10% of basic wages to 0.85% in March this year. The further reduction to 0.65% will help companies save around Rs 2,000 crore annually.