Employees work inside a Biomoneta laboratory in Bengaluru. (Photographer: Samyukta Lakshmi/Bloomberg)

EPFO Likely To Retain Interest Rate At 8.55% For FY19

Employees’ Provident Fund Organisation is likely to retain the interest rate on employees’ provident fund at 8.55 percent rate for financial year 2018-19 for its more than six crore subscribers, a highly-placed source said.

“The proposal for providing interest rate for the current fiscal would come up in the meeting of the trustees of the retirement fund body on Feb. 21,” the source said.

“The interest rate would be retained at 8.55 percent for the current fiscal as provided in 2017-18 in view of forthcoming Lok Sabha elections. The EPFO’s income projections for the current fiscal would be tabled in the meeting.”

The source, however, did not completely dismiss speculations that interest rate on employees’ provident fund deposits for this fiscal can be more than 8.55 percent in view of Lok Sabha elections. The Central Board of Trustees headed by labour minister is the apex decision making body of the EPFO which finalises rate of interest on provident fund deposits for a financial year.

Once approved by the CBT, the proposal is required concurrence of the Finance Ministry. The interest rate is credited into the subscribers account after the Finance Ministry’s approval.

The EPFO provided a five-year low rate of interest of 8.55 percent to its subscribers for 2017-18. The body had kept the interest rate at 8.65 percent in 2016-17 and 8.8 percent in 2015-16. It provided 8.75 percent interest for 2013-14 as well as 2014-15. The rate of interest was 8.5 percent in 2012-13.

Other important issues that can come up for discussion in the CBT meeting next week include appointment of new fund managers and review of investment made by the EPFO in exchange trade funds.

The EPFO had started investing in the ETFs in August 2016. It now invests 15 percent of its Rs 1.5 crore investible deposits at hand every year in the ETFs. It has invested around Rs 50,000 crore in the ETFs so far.

Also read: EPFO May Give Subscribers Option To Increase Stock Investments In New Year