NEW DELHI, Mar 4: The Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) on Thursday recommended that the 8.5% interest rate for PF contributions to the subscribers be retained for 2020-2021 as in the previous year.
At a meeting in Srinagar, the board, chaired by Labour and Employment Minister Santosh Kumar Gangwar, “recommended 8.50% annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2020-21,” a statement by EPFO said.
“The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into the subscribers’ accounts,” it said.
A CBT member said discussions on the investment portfolio of the retirement fund body took place and keeping the returns in consideration, the Board made the recommendation for 8.5 per cent interest rate.
The rate of 8.5% remains the lowest since 2012-2013, however, the EPFO said it was higher compared to other investments.
“EPFO over the years has been able to distribute higher income to its members, through various economic cycles with minimal credit risk. Considering the high credit profile of the EPFO investment, the interest rate of EPFO is considerably higher than other comparable investments avenues available for subscribers,” it said.
The EPFO said it had decided to liquidate investment in equity through exchange traded funds, which it had started in 2015-2016. It added that the interest rate recommended was a result of the income from interest from debt investment and income from equity investment.
“This has enabled EPFO to provide higher return to its subscribers and still allowing EPFO with healthy surplus to act as cushion for providing higher return in future also. There is no over-drawl on EPFO corpus due to this income distribution,” it said.
The retirement fund body has seen a high number of withdrawals and lower contributions in the aftermath of the Covid-19 pandemic. Till December 31, the EPFO had settled 56.79 lakh claims worth Rs 14,310.21 crore provided under the advance facility after the Covid-19 pandemic.
About 197.91 lakh final settlement, death, insurance and advance claims worth Rs 73,288 crore were settled during April-December. Exempted establishments, which run their own PF trusts had also settled 4.19 lakh claims disbursing Rs 3,983 crore.
(Manas Dasgupta)
