New Delhi- Retirement fund body EPFO on Thursday 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 on Thursday.
“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 on Thursday 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.
Earlier this year, there were speculations that the EPFO would lower interest on provident fund deposits for this fiscal (2020-21) in view of more withdrawals and lesser contribution by members amid the coronavirus pandemic.
In March last year, the EPFO had lowered interest rate on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent in 2018-19.
The EPF (Employees Provident Fund) interest rate provided for 2019-20 was the lowest since 2012-13, when it was 8.5 per cent.
The EPFO had provided 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18. The rate of interest was slightly higher at 8.8 per cent in 2015-16.
It had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13. The EPFO had provided 8.25 per cent rate of interest on provident fund in 2011-12.
During the CBT meeting, Gangwar also launched an e-facility for the Principal Employers (PEs), which would allow them to view PF compliance and remittances made by their contractors in monthly ECR (Electronic Challan cum Receipt or PF return).
Using this facility, the up-front credit of PMRPY (Pradhan Mantri Rojgar Protsahan Yojana) and ABRY (Aatmanirbhar Bharat Rojgar Yojana) scheme benefits, made into the PF accounts of contract employees claimed by contractors will also be visible to the PEs.
Through this facility, PEs can ensure that EPF contributions for all contract workers are remitted by their enrolled contractors.
Besides, Gangwar launched a web facility for registering, processing and monitoring of complaints and optional inspection by regional offices, zonal offices and head office through a web-based portal.
Earlier, under Inspection Scheme, 2014, permission of the head office was required for optional inspections and complaints investigations.
The minister virtually inaugurated three new regional office buildings of EPFO at Raichur, Salem, Jamshedpur and annexe buildings for zonal office and regional office in Bengaluru.
The CBT also approved creation of 98 posts in different cadres required for seamless functioning of regional offices of Jammu & Kashmir and paving the way for smooth absorption of all staff and officers of J&K EPFO into EPFO governed by the CBT.
The board also approved the Revised Estimates for the year 2020-21 and Budget Estimates for the year 2021-22 for EPFO and the schemes administered by it.
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