Employees’ PF can pay 8.5 per cent without strain this year
29 May 2009
The Employees Provident Fund Organisation (EPFO) will continue to provide 8.5 per cent interest rate to its 4.41 crore depositors during 2009-10, a various government officials are quoted as saying.
"We are in a position to maintain 8.5 per cent interest rate for the current fiscal. But the final call in this regard would be taken by the central voard of trustees," PTI quoted a top labour ministry as saying.
"There would be surplus of over Rs6 crore if EPFO maintains 8.5 per cent interest rate for 2009-10. The fund had earned an interest rate of 8.68 per cent between September and March last fiscal," the official said.
This is the first time in seven years that the social security fund will be able to pay investors without dipping into its reserves, according to EPFO trustee A D Nagpal told Livemint. This is thanks to new private sector fund managers who injected a dose of competition, along with a rise in bond prices after October.
Earlier, the finance and investment committee of the EPFO in its meeting on 26 March discussed the issues concerning interest rate on provident fund deposits.
According to the EPFO estimates, 8.5 per cent interest payment would leave a surplus of Rs 6.4 crore on an estimated income of Rs 12,994 crore in 2009-10. However, payment of 8.75 per cent interest by EPFO would result in a loss of Rs366.77 crore, and 9 per cent would mean a deficit of Rs739.94 crore.
The FIC's recommendations are considered by the Central Board of Trustees of EPFO, which takes the final call. EPFO manages a corpus of about Rs1,82,000 crore. It had given 8.5 per cent interest for 2008-09.
