EPFO board to meet this month, unlikely to cut rates below 8%

A decision on the interest rate for close to 60 million active subscribers of the Employee Provident Fund Organisation (EPFO) is likely to be taken in the next Central Board of Trustee (CBT) meeting, starting on March 25.

A letter from the social security organisation regarding the convening of the 233rd CBT meeting was sent to all the board members last week, soliciting their presence in the meeting.

Although the venue and the agenda haven’t been drawn out yet, sources familiar with the matter say that the interest rate is unlikely to go below 8 per cent level amid a rising interest rate scenario across the globe.

Besides, the issue of higher pension and the smooth implementation of the November 4 Supreme Court order along with the difficulties that pensioners are facing in accessing the pension portal is also likely to feature in the two-day meeting.

The last trustee meeting was held on October 31 where among other things, it was decided to extend proportionate pensionary benefits for members who have been in the scheme for more than 34 years by incorporating factors for year “less than 35 years” to year “less than 42 years”.

Earlier in March last year, the CBT had recommended a four-decade low-interest rate of 8.1 per cent for close to 60 million active subscribers of the social security organisation for the financial year 2021-22, leaving it with an estimated surplus of Rs 450 crore.

It was then ratified by the finance ministry in June 2022.

Last month, in an interview to a newspaper, the labour minister Bhupender Yadav had said that the rate for FY23 will be determined on the basis of contributions and withdrawals.

“It should be appreciated that the interest is determined based on the contributions received in EPF accounts, withdrawals made by EPF members, income received during the year.

"The rate will be recommended before the close of the financial year as per the scheme provisions.

"Hence, it will be taken up in the CBT during the concluding month of the financial year,” he said.

R Karumalaiyan, who represents Centre for Indian Trade Union (CITU) in the CBT says given that inflation has remained above the central bank’s tolerance band for the most part of the year and the hike in interest rate triggered by the tightening of the policy rate by US Fed, it is imperative that the interest rate is kept above 8 per cent for subscribers to make some gains on their savings.