The Central Board of Trustees of Employees' Provident Fund Organisation (EPFO) has recommended interest rate of 8.5% - the lowest interest rate in over five years - on provident fund deposits to around six crore subscribers for the current financial year (2019-20), Press Trust of India reported, citing Labour Minister Santosh Gangwar. This is lower than the 8.65% interest rate given on employees' provident fund (EPF) deposits for the previous financial year 2018-19.
The EPFO had provided 8.65% rate of interest to its subscribers for 2016-17 and 8.55% in 2017-18. The rate of interest was slightly higher at 8.8% in 2015-16.
The retirement fund body had provided 8.75% rate of interest in 2013-14 as well as 2014-15, higher than 8.5% for 2012-13.
The finance ministry, according to reports, has been nudging the labour ministry for aligning the EPF interest rate with other small saving schemes run by the government like the public provident fund and post office saving schemes.
The labour ministry requires the finance ministry's concurrence to provide a rate of interest on EPF deposits in a fiscal year. Since the Government of India is the guarantor, finance ministry vets the proposal for EPF interest rate to avoid any liability on account of shortfall in the EPFO income for a fiscal.
The labour ministry had earlier implemented retirement fund body EPFO's decision to restore pension commutation under the Employees' Pension Scheme, a move that will benefit 6.3 lakh pensioners.
Pension commutation refers to part-withdrawal of fund in advance by a subscriber, who then gets reduced pension amount for 15 years.
On February 20, the ministry notified the decision of the Employees' Provident Fund Organisation (EPFO) to restore pension of those who opted for commutation of their pension on or before September 25, 2008.
As many as 6.3 lakh pensioners would benefit from the decision. They had opted for commutation of their pension and got a lump sum at the time of retirement from their pension fund on or before September 25, 2008.