Employees’ Provident Fund Organisation (EPFO) may raise interest rates from the current level of 8.55 per cent, Mint has reported.
The annual internal review is yet to be concluded by EPFO. Three officials with knowledge of the development told Mint there was a good chance the EPF rate would be hiked. At the least the interest rate could be kept at the existing level.
“2018 has been a relatively low-yielding year for debt investments, but the EPFO is unlikely to revise the interest rate downward for 2018-19 from what it paid last fiscal,” an official told Mint.
In 2017-18, EPF savings earned 8.55 per cent interest. This figure was at a five-year low. In 2018-19, even an unchanged interest rate will make it an attractive savings scheme. The average interest rate of the Public Provident Fund (PPF) and the National Savings Certificate (NSC) was 7.7 per cent in 2019. Leading ultra short-term debt funds returned an average of 7.78 per cent.
Member of EPFO’s central board of trustees, Prabhakar Banasure, confirmed that there was little scope for reducing the interest rate and said that efforts to increase the interest would be made.
“We are exploring whether we can offer an interest rate of more than 8.55 per cent this financial year. Reduction of the rate is a complete ‘no’ at this point in time, though the final calculation and accounts audits are still on,” Bansure said.
EPFO has an active subscriber base of more than 60 million and manages retirement savings of over Rs 11 lakh crore.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.