Subscribers of the Employees’ Provident Fund (EPF) may get the entire 8.5 per cent declared interest rate for the financial year 2019-20 in one shot. This is because, the Employees’ Provident Fund Organisation (EPFO) has managed to sell its equity holdings and obtain high returns in December.
It is reported that EPFO may now have earned twice the amount that it had expected to earn a few months back when it was struggling to liquidate its equity holdings. This means, about 190 million subscribers may now see 8.5 per cent interest getting credited to their accounts at one go instead of two instalments as was earlier planned by EPFO.
However, the Finance Ministry is yet to approve this recommendation from the EPFO. If it is approved, the Labour Ministry proposes to make the interest available all together.
It is the usual practice for the EPFO to invest up to 15 per cent of its incremental fund in exchange traded funds or ETFs. In the financial year 2019-20, these investments had managed to earn a return of minus 8.3 per cent, as compared to 14.7 per cent in the previous financial year. About three months ago, the Central Board of Trustees (CBT) had planned to credit the interest in two instalments as it had failed to sell its equity holdings as per expectations, amidst the pandemic-induced market slump. At the time, in September, it was decided that while 8.15 per cent of the amount earned will be credited in the first instalment and the remaining 0.35 per cent later on.
Fortunately, the equity markets recovered in the past couple of months enabling EPFO to profitably liquidate its equity investments.
There has been more good news for EPF subscribers, with the Government readying to spend Rs 22,810 cr on the Atmanirbhar Bharat Rojgar Yojana by 2023. This special employees’ provident fund (EPF) scheme under the Atmanirbhar Bharat Rojgar Yojana has received the nod of the Union Cabinet. That means, in the next two years the Government will pay both the employees’ and employers’ (businesses and companies) contributions to the EPF for new hires.
A sum of Rs 1,584 crore has already been approved towards the same for this financial year, and in the next two years, an amount of Rs 22,810 will be spent on the same, benefitting about 58.5 lakh employees.