Provident Fund(PF) may get retained at 8.55%
The Central Board of Trustees(CBT) of the Employees’ Provident Fund Organisation(EPFO) to consider the rate of return for the current year despite having an increase in the minimum pension for subscribers.
The government is planning on to keeping the provident fund interest rate at 8.55% despite the fact that interest rates have shown a decline, which will benefit over 60 million subscribers of the Employees’ Provident Fund Organisation(EPFO). The double increase in the minimum pension which falls under the Employee Pension Scheme(EPS) of the EPFO will serve approx 5 million subscribers.
There is a FIAC(finance, investment and audit committee) meeting which will happen just before the CBT meet in which we will get a clear picture on all the accounts of EPFO and the exact rate of return that can be offered. But it is getting more evident that the rate will be kept at the same existing level.
The CBT is a tripartite body with government representatives, employers and trade unions which are guided by the labour minister. It is the top decision-making body of EPFO. The Rate of interest which is at 8.55% is higher than that available on government small saving schemes, the return on which it is benchmarked to market rates.
On February 7, the RBI decided to cut interest rates by a quarter point, the reasons cited were ease of inflationary pressures and the need to decrease the cost of funds to support economic activities amongst a depleting global growth outlook in the past few months.
The sub-committee on a pension has reviewed the high empowered committee proposals which are suggesting to double the minimum pension to Rs 2,000 from RS 1,000 now, and restrict its withdrawal before retirement and also introduce some amount of contribution from the beneficiaries during their work life. The official said that these proposals could be presented before the CBT.
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