EPFO is likely to hike interest rate on employees’ provident fund

As per the sources, retirement fund body EPFO is likely to announce an interest rate of 8.55 percent on PF deposits for 2018-19, same as provided in 2017-18, to its 6 crore subscribers. The proposal to declare interest rate for this fiscal is on the agenda of the Employees’ Provident Fund Organisation (EPFO) trustees meeting on February 21, 2019 .

It’s also said, “The interest rate is likely to be retained at 8.55 percent for this fiscal as provided in 2017-18 as Lok Sabha elections are around the corner. However, the EPFO’s income estimates for 2018-19 has not been circulated among the trustees and will be tabled in the meeting.” Earlier the reports had not dismissed completely speculations that interest rate on EPF deposits for this fiscal can be more than 8.55 percent in view of impending general elections.

The Central Board of Trustees (CBT) headed by Labour Minister is the apex decision making the body of the EPFO which finalizes rate of interest on PF deposits for a financial year. Once approved by the CBT, the proposal is required the concurrence of the Finance Ministry. The interest rate is credited into the subscribers account after the Finance Ministry’s approval.

The EPFO had 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. The EPFO trustees can also announce the appointment of new fund managers. The trustee would also review the performance of investments made by the body in stock markets.

The EPFO had started investing in the ETFs (exchange-traded funds) in August 2016. Presently it invests 15 percent of its Rs 1.5 crore investible deposits at hand every year in ETFs. It has invested around Rs 50,000 crore in ETFs so far.

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