EPFO Raises Interest Rates for 2013-14
The Employee Provident Fund Organization (EPFO), raised its interest rate payout of 8.75 percent for fiscal year ending on 31 March 2014. It is a 0.25 percent increase, when compared to the last financial year.
The apex decision making body of the EPFO – the central board of trustees (CBT), recommended the payout after trade unions referencing rising in inflation, demanded a 9 percent interest payout.
According to official sources of EPFO, the CBT recommended 8.75 percent. The amount that EPFO has is sufficient to distribute to the members. The estimated earned income for this year is Rs.25,048.55 crore, and paying at 8.75 percent interest will cost Rs.25,005.41 crore.
After paying at 8.75 percent, there is a surplus of Rs 43 crore. This recommendation by CBT is to be finally approved by the finance ministry of Union government.
There are 88 million subscribers, and only 36.7 million users are contributing actively up to the last two months to the EPF. The organization manages over Rs 6 trillion and since the last fiscal year it has grown up by 16.14 percent.
CBT has also decided to recommend an interim increase of 20 percent and above admissible entitlements in employee deposit linked insurance (EDLI). The maximum limit for this was Rs.1,30,000, and now has been increased to Rs. 1,56,000. Last year, there were 26,000 subscribers died, and their families benefited from this scheme. Once the finance ministry accepts the recommendation, it will cost an additional amount of Rs. 26 crore per year.
Source – Mint