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BW Businessworld

EPFO May Approve 8.5% Interest Rate For 2013-14

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Retirement fund body EPFO is likely to announce an interest rate of 8.5 per cent on provident fund deposits for 2013-14 to its over five crore subscribers, the same as provided for last fiscal.
According to sources, the preliminary estimates indicate that the payment of 8.5 per cent rate of interest will leave no deficit for the Employees' Provident Fund Organisation (EPFO) and could rather leave some surplus for the body.
"In all likelihood, the interest rate on PF deposits for this fiscal will be fixed at 8.5 per cent," a source said.
The source further said if the interest rate is to be increased to 8.75 per cent for the current fiscal, it would result in some deficit, which might not be acceptable to the finance ministry.
The body is likely to call a meeting of its apex decision making body, the Central Board of Trustees (CBT) headed by the Labour Minister, on September 23 to approve the interest rate.
During the meeting, the trustee would reconstitute the EPFO's advisory body--Finance and Investment Committee (FIC), which recommends the rate of interest to the CBT.
After the reconstitution of CBT by EPFO in June, the other sub-committees of EPFO like FIC, were dissolved and were required to be reconstituted.
As per the practice, the EPFO would have to place the proposal before FIC after which it is considered by the CBT for taking a final call on the matter.
Once approved, the proposal is put before the Finance Ministry for its concurrence.
The source said the CBT will meet again after reconstituting FIC sometime before Diwali (which falls on November 3) to approve the rate of interest for this fiscal.
EPFO paid 8.5 per cent interest rate to its subscribers in 2012-13, which was higher than 8.25 provided in the 2011-12 fiscal.