EPFO cuts interest rate on deposits to 8.50% for FY20; move to affect 6 crore salaried employees
The Employees’ Provident Fund Organisation (EPFO) on Thursday lowered the interest rate on provident fund deposits to 8.50% for FY20 (2019-20) from 8.65% in FY19 (2018-19), Labour Minister Santosh Gangwar said on Thursday.
The new rate is 15 basis points below the figure for the previous financial year, impacting earnings of its over 6 crore active subscribers. The last time EPFO had paid an 8.5% rate was 2012-13.
“Keeping everything in mind, we have decided to pay 8.5% interest rate,” labour minister Santosh Gangwar said after the EPFO’s central board of trustees (CBT) meeting in New Delhi.
The decision was taken following a meeting of the central board of trustees of the EPFO comprising representatives of employees, employers, and governments both at the centre and some member states.
Now, the labour ministry requires the finance ministry’s concurrence on the matter. Since the central government is the guarantor, the finance ministry has to vet the proposal for EPF interest rate to avoid any liability on account of shortfall in the EPFO income for a fiscal.
The finance ministry 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 EPFO on Thursday also ratified and appreciated restoration of normal pension after 15 years from the date of commutation, which will potentially benefit about 630,000 pensioners who had opted for partial withdrawal on or before 25 September 2009.
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