New Delhi: The finance ministry has accredited the labour ministry’s proposal for crediting 8.5% curiosity on Workers’ Provident Fund (EPF) deposits for the monetary yr 2019-20. The transfer that may profit almost six crore subscribers of the Workers Provident Fund Organisation (EPFO).
The Financial Occasions citing a senior authorities official talked about that the rate of interest will quickly be notified by the labour ministry.
EPFO’s Central Board of Trustees, the apex decisionmaking physique underneath the labour minister, had in March this yr accredited 8.5% rate of interest on EPF for 2019-20. Nonetheless, in September, the retirement fund physique had determined to separate cost of 8.5% curiosity into two tranches of 8.15% and 0.35% as its fairness investments had been nonetheless in losses.
EPFO had determined to credit score 8.15% curiosity (earned from its debt investments) instantly and the remaining 0.35% curiosity (capital positive factors from fairness investments) was topic to redemption of investments, the retirement fund physique had mentioned earlier.
The retirement fund physique invests as much as 15% of its incremental corpus in ETFs. In line with the ET report, in FY20, EPFO’s fairness investments accrued a return of minus 8.3%, down from 14.7% in FY19.
Nonetheless, after the rally in fairness market from October, which took benchmark indices to file highs, EPFO has reportedly managed to guide huge revenue on its fairness funding and determined to credit score the 8.50% curiosity quantity in a single go.
Price mentioning right here is that the rate of interest of 8.5% on PF deposits is the bottom in seven years. That is 15-basis factors decrease than 8.65% introduced for 2018-19.
Cost of the rate of interest of 8.5% would depart the retirement fund physique with a surplus of Rs 700 crore, as estimated earlier by its Finance Funding and Audit Committee, the enterprise day by day talked about.
The finance ministry has been nudging the labour ministry for aligning the EPF rate of interest with that of different small saving schemes, which have been linked to G-Sec charges.