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EPFO Likely to Retain 8.5% Interest on PF Deposits for 2013-14
Retirement fund body EPFO is likely to retain 8.5 per cent rate of interest for FY 2013-14 on PF deposits for its over 5 crore subscribers, which it provided in the previous fiscal.
Payment of 8.5 per cent rate of interest on PF deposit would leave a small surplus of Rs 56.96 crore in account books, says the agenda for the Employees’ Provident Fund Organisation’s (EPFO) trustees’ meet scheduled on January 13 under the chairmanship of new Labour Minister Oscar Fernandes.
The EPFO, which is estimated to have an income of Rs 20,796.96 crore in the current fiscal, needs Rs 20,740 crore to pay 8.5 per cent interest to its subscribers.
According to estimates, hiking the interest payment by half a per cent to 9 per cent would require an additional amount of Rs 1,220 crore, which does not seem feasible.
“Payment of interest to the members is expenditure for the Trust (EPFO), which is to be met out of its earnings. Thus, the rate of interest should be commensurate with the total earnings of the Trust,” the EPFO said in its proposal to the trustees.
EPFO’s apex decision making body - the Central Board of Trustees (CBT), headed by Labour Minister - would meet on January 13 after a gap of almost one year.
Earlier, it met in February this year. The decision on the interest rate is pending as the CBT has not met after it was reconstituted in May last year.
Once approved by the CBT, the decision on the interest rate requires concurrence of the Finance Ministry, which has to notify it. The interest is credited to the accounts of subscribers after the rate is notified.
According to norms, the EPFO is expected to announce the rate of interest on PF deposits before the start of the financial year.
However, for the past few years, the announcement of the rates has been delayed. The EPFO’s rate of interest was 8.5 per cent in 2012-13, up from 8.25 per cent in 2011-12.
Business Line, New Delhi, 30-12-2013