Poll bonanza: EPFO hikes interest rate to 8.65%, to benefit 6 crore subscribers
The decision has to be formally ratified by Finance Ministry.
Ahead of general elections, retirement fund body EPFO Thursday raised the interest rate on EPF to 8.65 per cent for 2018-19, the first increase in three years.
The interest on Employees Provident Fund (EPF) was hiked to 8.65 per cent for this fiscal from 8.55 per cent provided in 2017-18. The EPFO had earlier reduced the interest rate in 2016-17 to 8.65 per cent from 8.8 per cent in 2015-16. The Employees' Provident Fund Organisation's (EPFO) apex decision making body Central Board of Trustees deferred a decision on doubling the minimum monthly pension to Rs 2,000 to its next meeting to be held in March.
"We have decided to provide 8.65 per cent rate of interest on employees' provident fund (EPF) for 2018-19. The decision was taken with the consent of all members (trustees)," Labour Minister Santosh Gangwar said after the CBT meeting here.
Gangwar who also chaired the meeting said, "All members of the CBT at the meeting here agreed to give a higher interest for subscribers for the current fiscal. The proposal would now go to the Finance Ministry for approval. We will also convince them to provide this rate of interest." The minister also told reporters that providing 8.65 per cent rate of interest for this fiscal on EPF would leave a surplus of Rs 151.67 crore and that is why it decided to provide a higher rate this fiscal compared to 2017-18.
According to the EPFO income projections, providing 8.7 per cent rate of interest in EPF would have resulted in a deficit of Rs 158 crore.
Earlier, highly placed sources had indicated that the interest on EPF deposits for this fiscal could be more than 8.55 per cent in view of impending general elections.
Once approved by the CBT, the proposal to provide interest rate for a particular fiscal requires the concurrence of the Finance Ministry. The interest rate is credited into the subscribers account after the Finance Ministry's approval.
The CBT also ratified the amendment in EPF Scheme 1952, to enable accounting of Investment in Exchange Traded Funds (ETFs) (Equity & Related Investment).
The CBT also approved continuation of C-DAC as a consultant to carry out the second phase of Computerisation Project. The Board also gave extension to Standard Chartered Bank as custodian of the the EPFO securities on the existing terms and conditions of agreement for the period upto March 31, 2019.
The CBT approved revised estimate for 2018-19 and budget estimates for 2019-20. The Board gave consent to have performance review of the Portfolio Managers from a separate agency in addition to review by CRISIL Ltd.