EPFO likely to pay 8.5% interest on PF deposits

For the sixth year in a row, the EPFO subscribers are likely to get 8.5 per cent interest on their provident fund (PF) deposits for 2010-11.

"Maintaining 8.5 per cent interest rate for 2010-11 would leave a surplus of Rs 15.26 crore whereas EPFO would face a deficit of Rs 426.53 crore if it gives a return of 8.75 per cent to subscribers," an EPFO source said.

The Employees' Provident Fund Organisation (EPFO) with a subscriber base of over 4.7 crore has been maintaining the return of 8.5 per cent on deposits since 2005-06.

As per practice, the EPFO's advisory body Finance and Investment Committee (FIC) at its meeting on February 26 will firm up its view on interest rate to be paid to the depositors next fiscal.

Once the FIC firms up its view, its recommendations would be placed before EPFO's apex body Central Board of Trustees (CBT) for final decision. FIC recommendations are usually accepted by the CBT.

The source said, "EPFO has estimated an income of Rs 15,036 crore in 2010-11 and maintaining 8.5 per cent interest rate in next fiscal means interest payout of Rs 15,020.80 crore and a surplus of Rs 15.26 crore."

He further added, "Maintaining nine per cent return would not be feasible in any case as that would result in a deficit of over Rs 868 crore."