EPFO may pay 9% interest for 2015-16

According to EPFO income projections worked out in September, providing 9 per cent interest on PF will result in a deficit of Rs 100 crore (Rs 1 billion).

Retirement fund body EPFO may provide 9 per cent interest on PF deposits for this fiscal, which is higher compared to 8.75 per cent provided in previous two fiscals to its over 5 crore (50 million) subscribers.

"The income projection of Rs 34,844.42 crore (Rs 348.55 billion) for the current fiscal is expected to be revised upward.

“Thus the body can provide 9 per cent rate of interest on PF deposits for 2015-16," an EPFO trustee and Bharatiya Mazdoor Sangh Secretary P J Banasure told PTI.

The Employees Provident Fund Organisation's Finance Audit and Investment committee recommended 8.95 per cent interest on PF deposits for the current fiscal in its meeting earlier this week.

Banasure, who is also a member of FAIC said:"If the EPFO provides 8.95 per cent interest rate on PF deposits for 2015-16, it will leave a surplus of Rs 91 crore (Rs 910 million) as per income projections worked out in September last year.

"But the FAIC will meet again later this month to vet the latest income estimate which is likely to be revised upward."

According to EPFO income projections worked out in September, providing 9 per cent interest on PF will result in a deficit of Rs 100 crore (Rs 1 billion).

"We are expecting that there will be a surplus of Rs 100 crore (Rs 1billion) on providing 9 per cent rate of interest on PF deposits when EPFO will work out the latest estimates.

“FAIC can change its recommendation in the next meeting and suggest 9 per cent interest rate for 2015-16," he said.

The proposal has to be endorsed by the Central Board of Trustees before the Finance Ministry notifies it.

However, there has been indications from the Finance Ministry that it will slash interest rate on small savings like public provident fund in view of the rate cut by Reserve Bank of India.

The EPFO provides rate of interest from the earning on investments of formal sector workers' funds without any assistance from the government.

"If EPFO provides rate of interest from its own income and there is no deficit then I don't think that Finance Ministry should have any problem with that," All India Trade Union Congress Secretary D L Sachdev said.

Illustration by Uttam Ghosh/Rediff.com