Source | https://economictimes.indiatimes.com
NEW DELHI: Retirement fund body Employees’ Provident Fund Organisation (EPFO) has reduced interest rate on deposits to 8.55 percent for the financial year 2017-18 following a general decline in interest rates.
The decision was taken by EPFO’s central board of trustees at its 220th board meeting on Wednesday, labour minister Santosh Kumar Gangwar said. EPFO had announced an interest rate of 8.65% for 2016-17 and 8.8% in 2015-16.
The move will affect around six crore subscribers and leave EPFO with a surplus of Rs 586 crore against Rs 695 crore in the previous financial year.
The interest rate decided by the central board of trustees will have to be vetted by the finance ministry, following which it would be notified.
EPFO had earlier this year sold Rs 3,700-crore equity shares in the market, earning a profit of Rs 1,100 crore as a result of which it was felt that the retirement fund body could retain the interest rate for the current financial year at 8.65%. However, the labour minister said this money has been used to purchase securities at higher rates.
The finance ministry had last month lowered interest rate on General Provident Fund (GPF) and Public Provident Fund (PPF) to 7.6% to be effective from January 1, 2018, much below the returns on provident fund deposits. This has widened the gap and has made PF more lucrative as an option for employees.