EPFO may offer more than 8.75% interest for 2015-16

The Employees Provident Fund Organisation (EPFO) may offer an interest rate of over 8.75% for 2015-16, cheering up the over 40 million people who subscribe to the retirement fund manager.

EPFO has already briefed labour minister Bandaru Dattatreya about its earning estimates and its readiness to offer a higher rate of interest than the previous fiscal, at least two government officials said on Tuesday, requesting anonymity. In 2014-15, it offered 8.75% interest rate.

Although EPFO did not discuss the interest rate payout on Tuesday in a meeting of the central board of trustees (CBT), “it has calculated its estimated earning and is ready to give a better payout,” the first government official said.

The second official said the labour ministry has already discussed the matter with the finance ministry informally and the proposal may get the go-ahead in the December meeting of CBT.

The government officials said a better earning and new subscribers coming under EPFO ambit had resulted in a bigger corpus. Last year, the government raised the wage ceiling from Rs.6,500 to Rs.15,000 for mandatory provident fund compliance. It means employees getting a monthly salary of Rs.15,000 are mandatorily covered under EPFO now as against all those getting Rs.6,500 before September 2014.

Last year, when EPFO announced a 8.75% interest rate, it said that it will have an income of Rs.29,136.42 crore in 2014-15. An 8.75% payout then meant a surplus of Rs.242 crore, Mint reported on 26 August 2014. A more than 8.75% interest rate means EPFO needs a total income of over Rs.29,000 crore this fiscal year for both interest rate payout and other administrative charges.

Central provident fund commissioner K.K. Jalan declined to comment on the issue but said any interest rate decisions will be finally decided by CBT and “we may present our case in the 9 December meeting”.

Source : Livemint