Provident Fund interest lowered
Posted on: 22/Feb/2018 11:10:08 AM
The Employees Provident Fund Organisation, or EPFO, has lowered the rate of interest on employees provident fund to 8.55 per cent for it’s over 6-crore subscribers for 2017-18, from 8.65 per cent in the previous fiscal.
Speaking about this, the Union Labour Minister Santosh Gangwar said, It is difficult to evaluate about future in view of present economic scenario. We paid 8.65 per cent last fiscal, which left a surplus of Rs 695 crore. This year, we have decided to recommend 8.55 per cent for 2017-18, which will leave a surplus of Rs 586 crore. We expect the finance ministry to give concurrence to the 8.55 per cent rate of interest decided today at the CBT meeting.
After the CBT`s decision on interest rate, the proposal is vetted by the finance ministry. Once approved by the finance ministry, the rate of interest is credited into subscribers` account.
Mr. Gangwar said, We hope that the trade unions will agree to the decision of providing 8.55 per cent rate of interest. The EPFO has liquidated portion of its investments in the exchange traded funds, or ETFs, to bridge the gap to provide 8.55 per cent interest this fiscal. The EPFO received 8 per cent returns on its bond investments but it is able to pay 8.55 per cent rate because it has sold some of its investments in ETFs. It is higher than 7.6 per cent provided to General Provident Fund and Public Provident Fund subscribers. The ETF investments have fetched a return of 20.65 per cent so far, and in the months of January and February this year, the EPFO has sold Rs 3,700 crore ETFs which earned a return of Rs 1,011 crore. On the administrative charges, the CBT has decided to reduce the administrative charges from 0.65 per cent to 0.50 per cent of total wages which are paid by employers. The trust has also decided to reduce the workers threshold for coverage under the EPFO schemes to 10 from existing 20. The reduction in employees threshold could help increase the EPFO subscribers` base from existing 6 crore to even 9 crore. The required amendment in the Employees` Provident Fund & Miscellaneous Provisions Act would be done to implement the decision to reduce employees’ threshold.
