In one financially pleasing news, subscribers of retirement fund Employees’ Provident Fund (EPF) are all set to get the entire 8.5% declared interest rate for FY2019-20 in one go due to Employees’ Provident Fund Organisation’s (EPFO) higher-than-expected returns in December due to the market rally.
For the unaware, back in September, the central board of trustees (CBT) had announced that EPFO would be crediting the interest in two installments.
As per the Business Standard Newspaper, EPFO has doubled the surplus projected three months back and thus is all set to release 8.5% interest rate in one go.
As of now, the Union labour and employment ministry has written to the finance ministry seeking approval on crediting 8.5% interest into around 190 million EPF accounts for 2019-20.
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“The recommendation is pending approval of the finance ministry which is expected to come within a week. The labour ministry has proposed to notify the interest rate at one go now,” a top government official told the publication.
Earlier, the central board of trustees (CBT) had announced that EPFO would be crediting the interest in two installments. This was the result of the retirement fund not being able to liquidate its equity investments due to the COVID-led market fall.
In specific words, the EPFO back then has said that it would credit 8.15% interest (earned from its debt investments) immediately and the remaining 0.35% interest (capital gain from equity investments) later.
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Due to COVID-19 lockdown, EPFO’s equity investments accrued a return of minus 8.3%, down from 14.7% in FY19. But thankfully, due to a sharp rebound witnessed in equity markets in October, November and December, EPFO has been able to liquidate its equity investments at profit.
