Built Business Tough

EPFO reduces interest rate on employee provident fund to 8.5% for FY20

Retirement fund human body Workers Provident Fund Organisation (EPFO) on Thursday decreased the curiosity rate on deposits to 8.fifty for every cent for 2019-twenty from 8.sixty five for every cent in 2018-19. The choice was taken at a conference of the central board of trustees (CBT) of the EPFO.

“EPFO lowers curiosity rate on staff provident fund to 8.fifty for every cent for 2019-twenty from 8.sixty five for every cent in 2018-19,” reported Labour Minister Santosh Gangwar after the conference.

Now, the labour ministry calls for the finance ministry’s concurrence on the subject. Because the Government of India is the guarantor, the finance ministry has to vet the proposal for the EPF curiosity rate to avoid any legal responsibility on account of a shortfall in the EPFO profits for any financial 12 months.

The move usually means that salaried staff would make lower returns for the financial 12 months ending March 31, 2020. The EPFO was providing subscribers an curiosity of 8.sixty five for every cent in 2018-19. It had furnished 8.sixty five for every cent rate of curiosity for 2016-seventeen and 8.fifty five for every cent in 2017-18. The rate of curiosity in 2015-sixteen was somewhat better at 8.8 for every cent.

The finance ministry has been nudging the labour ministry to align the EPF curiosity rate with other smaller preserving techniques operate by the governing administration, this kind of as the community provident fund and publish place of work preserving techniques.

The EPFO invests eighty five for every cent of its annual accruals in the debt current market and fifteen for every cent in equities via trade-traded resources.

At the stop of March previous 12 months, the EPFO had a cumulative investment of Rs 74,324 crore in equities, fetching a return of fourteen.74 for every cent.