The Employees' Provident Fund Organisation (EPFO) board here on Thursday raised the interest rate on Employees' Provident Fund (EPF) by 10 basis points to 8.65 per cent for 2018-19. It will benefit around 5 crore people of the salaried class.
"In today's CBT meeting, the main agenda was the interest rate. Considering everybody's views, it was decided to raise the interest rate by 10 bps to 8.65 per cent," Labour Minister Santosh Gangwar told IANS after chairing the Central Board of Trustees (CBT) meeting.
This is the first increase in interest rates since 2016. From 8.8 per cent in 2015-16, it fell to 8.65 per cent in 2016-17 and further to 8.55 per cent in 2017-18. In FY18, the rate was at a five-year low. For 2013-14 and 2014-15, it stood at 8.75 per cent.
"We took good care of the workers' money and it was not misused. Despite our increasing the interest rate to 8.65 per cent, we are saving Rs 151 crore as surplus. I am confident the Finance Ministry will approve this. There was full consensus for today's decision," he said.
The CBT, which has representatives from the government, employers and trade unions, will hold another meeting to discuss on pension issues.
The interest amount will be credited directly into the subscribers' accounts after Finance Ministry's approval.
"Over Rs 54,000 crore for 2018-19 will be distributed among 20 crore subscribers," EPFO CEO Sunil Barthwal told IANS. The EPFO's total corpus is around Rs 8 lakh crore, he said and added, there are about 5 crore active EPF subscribers.
The hike has come as a pleasant surprise as it was being speculated that the retirement fund body would keep the interest rate at 8.55 per cent, considering the fiscal stress on the government. But it was in line with the populist measures being taken by the government ahead of the general elections, likely in April-May.
Had the CBT decided to raise the rate to 8.70 per cent, instead of 8.65 per cent, the EPFO would have faced a deficit of Rs 158 crore, an official said.