In what may be a windfall for crores of employees in public and private sector, the Provident Fund Trustees today decided to give a higher interest rate of 9.5 per cent for 2010-11 on their retirement savings.

The steep one percentage points increase has taken the interest on PF deposits of 4.71 crore organised sector workers to a five-year high from the current level of 8.5 per cent.

The decision to raise the interest rate was taken by the Central Board of Trustees (CBT), the highest policy making body of the Employees Provident Fund Organisation (EPFO), sources said.

Although the decision to provide 9.5 per cent interest rate would result in a deficit of about Rs 1,600 crore, the same would be made good by a surplus of Rs 1,731 crore in the interest suspense account of the EPFO.

The recommendation of the CBT, headed by labour minister Mallikarjun Kharge, will be forwarded to the finance ministry.

The finance ministry, which notifies the provident fund interest rate, usually accepts the recommendation of the CBT.