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New Delhi: Subscribers to the retirement fund The Employee Provident Fund (EPF) are likely to get the full declared interest rate of 8.5% for the 2019-20 fiscal year in one go, as the Employees Provident Fund Organization Employees (EPFO) has been able to sell its equity stakes and earn more cuts than expected in December due to the market rebound. EPFO has now doubled the surplus projected three months ago, Commercial standard The newspaper quoted an anonymous senior EPFO official in a report.
According to the report, the Union Ministry of Labor and Employment has written to the Ministry of Finance, requesting that an 8.5% interest be credited on around 190 million EPF accounts for 2019-20.
“The recommendation is pending approval by the Finance Ministry, which is expected to arrive within a week. The Ministry of Labor has proposed to notify the interest rate only once, ”a senior government official told the publication.
In early September, the central board of trustees (CBT) had announced that EPFO would credit interest in two installments for the first time, as the retirement fund was unable to liquidate its equity investments due to the market crash led by COVID. Therefore, EPFO had decided to credit the 8.15% interest (earned from its debt investments) immediately and the remaining 0.35% interest (capital gain from equity investments) subject to redemption.
The retirement fund body invests up to 15% of its incremental corpus in ETFs. In fiscal year 20, EPFO’s equity investments yielded a return of minus 8.3%, compared to 14.7% in fiscal 2019. However, due to the strong rebound observed in the equity markets in October In November and December so far, EPFO has been able to liquidate its equity investments at a profit.
EPFO had awarded an 8.65% interest in fiscal year 2019. Interest of 8.5% for fiscal year 2020 is a minimum of seven years. But the fall in EPF interest for fiscal 2020 is much less than the overall fall in the market interest rate on similar products. It is worth mentioning here that interest rates on fixed deposits have fallen almost 150 basis points in the last year.
