EPFO to pay 8.5% interest on deposits for FY13

Decision taken at the meeting of the Central Board of Trustees

Retirement fund body Employees' Provident Fund Organisation (EPFO) today decided to pay 8.5 per cent interest rate to its over 50 million subscribers on their provident fund (PF) deposits for the financial year 2012-13, higher than the 8.25 per cent provided in the previous financial year.

The decision was taken at the meeting of the Central Board of Trustees (CBT), the highest decision making body of EPFO, chaired by the labour minister.      

“A decision has been taken to pay 8.5 per cent interest on PF deposits. But we have expressed our reservations, as we wanted higher interest rate,” said D L Sachdev, secretary, All India Trade Union Congress, after the CBT meeting. Earlier, a note prepared by EPFO for consideration of the February 15 meeting of the Finance and Investment Committee (FIC) had said, “... 8.5 per cent rate of interest for the year 2012-13 is feasible.”

According to the EPFO estimates, a payment of 8.6 per cent interest rate on PF deposits would result in a deficit of Rs 240.49 crore whereas a 8.5 per cent interest rate for the current financial year would leave a surplus of Rs 4.13 crore.     

In the FIC meeting, union leaders refused to discuss the issue regarding payment of interest in the current financial year, as the agenda note for the issue was not provided in advance to them, sources said, adding the note was tabled during the meeting.     

They had said the EPFO's estimates would be directly tabled before the CBT meeting , for final approval.      

The notification on interest rate is issued by the government after concurrence with the finance ministry. Usually, EPFO announces interest rate at the beginning of the year, but there has been a delay this time.

Trade unions have been pressing for an early meeting of the CBT to decide on the interest rate for the current financial year.     

EPFO had paid 8.25 per cent interest to its subscribers for 2011-12, lower than the 9.5 per cent disbursed in 2010-11.

Interest rate for the financial year 2010-11 was 9.5%.