Ministry of Finance approves 8.5% interest on PF deposits for FY 2020-21
The Finance Ministry has approved 8.5 per cent rate of interest on provident funds for 2020-21, sanctionative the Employees’ Provident Fund Organisation (EPFO) to credit interest within the accounts of beneficiaries.
In a decision ahead of Diwali, the Finance Ministry has approved 8.5 per cent rate of interest on provident funds for 2020-21, sanctionative the Employees’ Provident Fund Organisation (EPFO) to credit interest within the accounts of beneficiaries. With the ministry’s approval on Friday, the labour ministry plans to advise the speed at the earliest, a senior government official said told The Indian Express. The EPFO has a full of life subscriber base of over 6.7 large integer and 6.9 large integer contributive establishments.
The interest rate was reportedly decided on income of Rs 70,300 crore from the sale of debt and equity, leaving a surplus of Rs 300 crore at EPFO. The central board of directors (CBT) of the pension fund institution had recommended in March to keep the interest rate for financial year 202021 at 8.5%. The recommendation was made keeping the returns on equity investments.
For FY2021, the EPFO had determined to liquidate funding in fairness and the interest rate recommended turned into an end result of combined profits from interest acquired from debt funding in addition to profits realised from equity funding. The method of ratifying the interest rate was expedited to advantage people ahead of the competition season. The EPFO had retained the interest rate on PF deposits for 2020-21 at equal price as in 2019-20 in spite of the significant withdrawals withinside the wake of Covid’s impact of humans’s monetary resources. The retirement fund frame noticed excessive withdrawals and decrease contributions withinside the aftermath of the Covid-19 pandemic. Until December 31, the EPFO had settled 56.seventy nine lakh claims really well worth Rs 14,310.21 crore provided below the development facility.
Over the years, the finance ministry has questioned a comparatively high rate maintained by EPFO and has been nudging it to cut back the speed to a sub-8 per cent level in line with the rate of interest scenario. EPFO rate continues to be the best among different savings instruments. little savings rates vary from 4.0 per cent to 7.6 per cent, and are unbroken unchanged in recent quarters, despite a fall in overall market rates.
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