The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) has recommended splitting payment of the interest rate of 8.5% recommended for financial year 2019-20 into two parts, citing “exceptional circumstances arising out of Covid-19”. The EPFO will credit 8.15% to its over six crore subscribers for the year immediately and give the remaining 0.35%, which is linked to its equity investments, “before December 31”. This, it said, is subject to redemption of its units invested in exchange-traded funds or ETFs. At 8.5%, the EPF interest rate is at a seven-year low. If the redemption of ETF units does not come through as anticipated, the 8.15% interest rate would be the lowest since 1977-78, when the EPFO paid out an interest rate of 8%.
Wednesday’s announcement effectively means that the retirement fund body is in a position to make only part payment of interest, amounting to around Rs 58,000 crore, right now, a member of the Central Board of Trustees said. The 0.35% component, or approximately Rs 2,700 crore, will be held over apparently due to liquidity issues.
Source: The Indian Express
