The Employees’ Provident Fund Office today lowered the rate of interest on employees provident fund to 8.55 percent for its over 6-crore subscribers for 2017-18, from 8.65 percent in the previous fiscal.
“It is difficult to evaluate the future in view of present economic scenario. We paid 8.65 percent last fiscal, which left a surplus of Rs 695 crore. This year, we have decided to recommend 8.55 percent for 2017-18, which will leave a surplus of Rs 586 crore,” Labour Minister Santosh Gangwar told reporters after the EPFO trustees meet.
Gangwar, who also heads EPFO’s apex decision making body – the Central Board of Trustees, said he expects the finance ministry to give concurrence to the 8.55 percent rate of interest decided today. After the CBT’s decision on interest rate, the proposal is vetted by the finance ministry. Once approved by the finance ministry, the rate of interest is credited into subscribers’ account.
Gangwar expressed hope that the trade unions will agree to the decision of providing 8.55 percent rate of interest.
ETF Investments Pared
The minister said the EPFO received 8 percent returns on its bond investments but it is able to pay 8.55 percent rate because it sold some of its investments in exchange traded funds. The EPFO has invested around Rs 44,000 crore so far in the ETFs. It had started investing in ETFs in August 2015.
Gangwar added the ETF investments fetched a return of 20.65 percent so far, and in the months of January and February this year, the EPFO sold Rs 3,700 crore ETFs which earned a return of Rs 1,011 crore.
Administrative Charges Cut
On the administrative charges, he said the CBT has decided to reduce the administrative charges from 0.65 percent to 0.50 percent of total wages which are paid by employers.
Employees Threshold Reduced
The minister also said the trust has decided to reduce the workers’ threshold for coverage under the EPFO schemes to 10 from existing 20. At present, all those units employing 20 or more employees are mandatorily covered under the social security schemes run by the EPFO.
He expressed hopes that reduction in employees threshold could help increase the EPFO subscribers’ base from existing 6 crore to even 9 crore.
Gangwar also assured that the required amendment in the Employees’ Provident Fund & Miscellaneous Provisions Act would be done to implement the decision to reduce employees threshold.
Earlier, the CBT had also taken this decision, but it could not be implement because of long pending amendment in the Act. (With Bloomberg Quint)
