Salaried employees could face a cut in interest on their provident fund (PF) deposits in the Finacial year 2020. After the cut, the interest rates on PF deposits would drop to 8.5%.
EPFO is considering slashing the interest rates on the provident fund by 15 basis points. If that follows through, employees would face a cut in interest in their PF this year. Provident fund deposits yielded 8.65 percent in FY19. After the cut, the interest rates on PF deposits would drop to 8.5 percent.
According to a report in The Economic Times, the issue would be taken up at the central board of trustees (CBT) meeting of the EPFO on March 5. The slash in interest rates would depend on the earnings of the EPFO.
Earnings from long term fixed deposits (FDs), bonds and government securities (G-Secs) fell 50-80 bps over the past year and the retirement fund body may thus find it difficult to keep rates unchanged this fiscal year.
The Finance Investment and Audit Committee (FIAC) would take the final call before the CBT meeting on the rate of return on PF deposits, depending on the exact earnings of the retirement fund body.
The EPFO invests 85 percent of its annual accruals in the debt market and 15 percent in equities through exchange-traded funds. At the end of March last year, the EPFO had a cumulative investment of Rs 74,324 crore in equities, fetching a return of 14.74%.
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