Salaried employees could face a cut in interest on their provident fund (PF) deposits this year with lower yields seen on investments by the Employees’ Provident Fund Organisation (EPFO).
The EPFO is considering a cut of 15 basis points in the interest rate on PF deposits in FY20 to 8.5%. Provident fund deposits had fetched 8.65% in FY19. The issue is likely to be taken up at the central board of trustees (CBT) meeting of the EPFO on March 5.
The retirement fund body may find it difficult to keep the interest rate unchanged for this fiscal year, a person aware of the financials told ET. The earnings on longterm fixed deposits, bonds and government securities are down 50-80 basis points over the past one year, said the person. One basis point is one-hundredth of a percentage point.
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The Finance Investment & Audit Committee (FIAC) will take a final call just before the CBT meet on the rate of return on PF deposits, depending on the exact earnings of the retirement fund body.
Source: Economic Times
