EPFO likely to provide 9% interest for 2014-15
Retirement fund body EPFO is likely to provide 9% rate of interest on PF deposits for the current fiscal to its over five crore subscribers, slightly higher than 8.75% paid in 2013-14.india Updated: Jun 06, 2014 22:56 IST
Retirement fund body EPFO is likely to provide 9% rate of interest on PF deposits for the current fiscal to its over five crore subscribers, slightly higher than 8.75% paid in 2013-14.
"The initial estimates indicate that the Employees' Provident Fund Organisation (EPFO) can easily provide 9% of interest on PF deposits for 2014-15," a source said.
According to him, the improved market conditions, especially after the formation of a new government at Centre last month, have raised expectations of higher yields on various investments by the body.
EPFO manages a corpus of over Rs 5 lakh crore. It has received Rs 71,195 crore as incremental deposits from its subscribers under social security schemes run by it during 2013-14, which is 16% higher than Rs 61,143 crore collected by it in 2012-13.
The source said EPFO also plans to unlock its investment of around Rs 55,000 crore in Special Deposit Scheme (SDS). The government pays a fixed rate of 8% on SDS to EPFO which is lower than other investment options available in the present legal frame work.
EPFO is also expected to improve yields or returns on its investment under the new norms prescribed under an investment pattern notified by the labour ministry last year.
According to the new pattern, EPFO can invest up to 55% of its funds in debt securities issued by banks and financial institution and other body corporates.
The new investment pattern also allows EPFO to invest up to 5% of its corpus into money market instruments, including units of mutual funds, equity linked schemes regulated by Securities and Exchange Board of India.
The new investment norms also provide for parking up to 55% of the EPFO funds in a new category comprising government and state bonds.