PF: Rate lowered to 8.25% for 2011-12

The Finance Ministry has given its nod for the Labour &  Employment Ministry to fix the rate of interest payable to EPF (Employees' Provident Fund) subscribers at 8.25% for 2011-12, instead of at 9.5 % paid in 2010-11.

The decision was taken in keeping with the finances of the EPFO (Employees' Provident Fund Organisation), which manages the PF fund.

They are paying from the interest they get from what they invested 2 or 3 years ago in financial institutions. So what is reflected now to the PF subscribers relates to the investment made earlier and the rate of interest that prevailed then in the market.

The Board of Trustees of the EPFO, which includes representatives of labour unions too, approved the proposal to leave the financial decision on the interest rate to the Labour &  Finance Ministries.
The Board, at its meeting on December 23, 2011, empowered the Labour Ministry to take the decision in view of the plea for reducing the interest this year (2011-12) to 8.25%.

In 2010-11, the rate was fixed at 9.5%, thanks to availability of a surplus fund of Rs. 1,731 crore.

Later, the Labour Ministry prepared a note mentioning that the rate for 2011-12 could be fixed at 8.25%, to benefit about 5 crore PF subscribers. This is to ensure that the rate matched the interest rate being offered to PPF (Public Provident Fund) scheme customers in scheduled banks.

Image from ET

Share: