EPF subscribers need not worry

EPFO trustees likely to fix rate of return at 8.5%

PTI | August 27, 2010



For the sixth year in a row, over 4.7 crore subscribers of retirement fund manager EPFO are likely to get 8.5 per cent interest on their deposits in the current fiscal.

"EPFO's apex decision-making body, the Central Board of Trustees (CBT), is likely to fix 8.5 per cent interest for subscribers at its meeting scheduled for September 10," a source said.

He said that maintaining 8.5 per cent rate of return for depositors is expected to leave a surplus of Rs 15.26 crore with EPFO. The organisation has been giving 8.5 per cent rate of return to the subscribers since 2005-06.

In April, the trustees of the Employees' Provident Fund Organisation's (EPFO) had deferred a decision on rate of return for its subscribers for 2010-11.

Some trustees had reservations against fixing interest rate on the basis of income and interest payout projections for current fiscal by EPFO official. They had demanded a comparative analysis of what was projected and the actual interest payout and liabilities in the past years.

The analysis indicated that in the past three financial years, the actual deficit remained higher than the projected.

EPFO invests in central and state government securties as well as in public sector undertakings and financial institutions.

In 2009-10, EPFO projected that there would a surplus of Rs 6.4 crore on maintaining 8.5 per cent interest rate. But it turned out to be a deficit of Rs 291.08 crore.

Similarly, for 2008-09, a deficit of Rs 139.25 crore was estimated for maintaining interest rate at 8.5 per cent which amounted to Rs 157.62 crore. In 2007-08, for providing at return of 8.5 per cent, the estimated shortfall was Rs 263.78 which again went up to Rs 499.45 after interest payouts.

The employees' representatives demanded at the last meeting that the rate of return on provident fund deposits be raised to 9.5-10.5 per cent from 8.5 per cent.

The EPFO's key advisory body, the Finance and Investment Committee (FIC), had recommended 8.5 per cent interest rate for 2010-11 at a meeting held on February 26 this year.

The FIC recommendations are usually accepted by the CBT.

The committee had said that maintaining 8.5 per cent interest rate would leave a surplus of Rs 15.26 crore. The EPFO has estimated an income of Rs 15,036 crore in 2010-11.

FIC had also indicated that increasing the rate to 8.75 per cent for the next fiscal would result in a huge deficit of Rs 426.53 crore and 9 per cent return would result in a deficit of over Rs 868 crore.

The retirement fund manager had maintained an interest rate of 9.5 per cent for three consecutive financial years between 2002 and 2005.

Comments

 

Other News

‘Oral cancer deaths in India cause productivity loss of 0.18% GDP’

A first-of-its-kind study on the economic loss due to premature death from oral cancer in India by the Tata Memorial Centre has found that this form of cancer has a premature mortality rate of 75.6% (34 premature events / 45 total events) resulting in productivity loss of approximately $5.6 billion in 2022

Days of Reading: Upendra Baxi recalls works that shaped his youth

Of Law and Life Upendra Baxi in Conversation with Arvind Narrain, Lawrence Liang, Sitharamam Kakarala, and Sruti Chaganti Orient BlackSwan, Rs 2,310

Voting by tribal communities blossoms as ECI’s efforts bear fruit

The efforts made by the Election Commission of India (ECI), over last two years, for inclusion of Particularly Vulnerable Tribal Groups (PVTG) communities and other tribal groups in the electoral process have borne fruit with scenes of tribal groups in various states/UTs participating enthusiastically in t

GST revenue for April 2024 at a new high

The gross Goods and Services Tax (GST) collections hit a record high in April 2024 at ₹2.10 lakh crore. This represents a significant 12.4% year-on-year growth, driven by a strong increase in domestic transactions (up 13.4%) and imports (up 8.3%). After accounting for refunds, the net GST

First Magahi novel presents a glimpse of Bihar bureaucracy a century ago

Fool Bahadur By Jayanath Pati (Translated by Abhay K.) Penguin Modern Classics, 112 pages, Rs 250 “Bab

Are EVs empowering India`s Green Transition?

Against the backdrop of the $3.5 billion Production-Linked Incentive (PLI) scheme launched by the Government of India, sales of Electric Vehicles (EVs) are expected to grow at a CAGR of 35% by 2032. It is crucial to take into account the fact that 86% of EV sales in India were under the price bracket of $2

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter