NEW DELHI, Mar 4: Retirement fund body EPFO today decided to retain 8.5 per cent annual rate of interest on provident fund deposits for the current financial year for its more than five crore active subscribers.
The Employees’ Provident Fund Organisation’s (EPFO) apex decision-making body Central Board of Trustees decided to fix 8.5 per cent rate of interest for 2020-21 at its meeting in Srinagar today.
“The Central Board of Trustees (CBT) recommended 8.50 per cent annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2020-21,” a Labour Ministry statement said.
According to the statement, the 228th meeting of the CBT, EPFO was held today in Srinagar, Jammu & Kashmir under the chairmanship of Union Minister of State for Labour & Employment(Independent Charge) Santosh Kumar Gangwar.
As per the practice, the CBT decision on interest rate would be send to the Finance Ministry for concurrence. After getting the Finance Ministry’s nod, the 8.5 per cent rate of interest for this fiscal would be credited into the EPFO subscribers’ accounts.
The interest rate would be officially notified in the Government gazette following which the EPFO would credit the rate of interest into the subscribers’ accounts, the statement said.
“For FY’2021, the EPFO decided to liquidate investment (in equity) and the interest rate recommended is a result of combined income from interest received from debt investment as well as income realised from equity investment. This has enabled EPFO to provide higher return to its subscribers and still allowing EPFO with healthy surplus to act as a cushion for providing higher return in future also. There is no over-drawal on EPFO corpus due to this income distribution,” it said.
Talking to PTI, K E Raghunathan, an EPFO trustee said the EPFO would have a surplus of around Rs 300 crore on maintaining 8.5 per cent rate of interest for the current fiscal at par with 2019-20.
During the period from 2015-16, the EPFO prudently started investing in equity through exchange traded funds based on the NSE 50 and BSE 30 indices.
The investment in equity assets started from 5 per cent for FY’2015 and subsequently went up to 15 per cent of the incremental portfolio.
The assured fixed return approach of the EPFO, announced by the CBT every year, along with the tax exemptions makes it an attractive choice for investors, providing them with strong social security in the form of provident fund, pension and insurance schemes, the Ministry said. (PTI)
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