EPFO may lower interest rate on PF deposits

Retirement fund body EPFO hasrecommended a cut in interest rate on provident fund deposits to 8.25 per centfor 2011-12 from 9.5 per cent in the last fiscal.

 

"It is observed that the 8.25 per cent rate of interestis feasible (in 2011-12)," said the agenda note for the meeting of Financeand Investment Committee (FIC), the EPFO advisory body. The meeting is scheduled forDecember 22.

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The decision will have implications for over 4.72 croreEmployees' Provident Fund Organisation's (EPFO) subscribers across the country.

According to employees' representatives in the EPFO apexdecision making body, Central Board of Trustees, headed by the Labour Minister,EPFO can easily pay up to 8.75 per cent as there are sufficient funds.

They claim EPFO estimates have not factored in the incomeaccruing to inoperative accounts.

According to their estimates, these accounts have close toRs 10,000 crore and generate an income of over Rs 800 crore which wouldsufficient to pay additional half a percentage point more over the projected8.25 per cent.

The final decision on payment of interest rate in 2011-12will be taken by the Central Board of Trustees in itsmeeting scheduled on December 23 on the recommendation of advisory body FIC.