The central board of trustees of the Employees’ Provident Fund Organisation (EPFO) recommended 8.80 per cent rate of return on retirement savings under its watch for 2015-16.
Although this is a notch higher than the 8.75 per cent offered by the EPFO to its subscribers at present, the announcement has left the trade unions disappointed as they complain that the financial and investment panel of the EPFO board had earlier recommended interest rate of 8.95 per cent.
Key Points
The EPFO has estimated Rs. 34,844 crore as its income meant for distribution of interest to its 8.7 crore subscribers for 2015-16.
This includes a surplus of Rs. 1,604 crore which accrued in 2015 to the EPFO's income beyond the fund’s original estimates.
The FIAC had discussed that with increase in the interest rate to 8.95 per cent, the surplus available with the retirement body would come out to be Rs. 91.40 crore.
At 8.80 per cent and 8.85 per cent, the surplus would be Rs. 673.85 crore and Rs. 479.70 crore, respectively.
Background
Earlier, the labour ministry had proposed 8.90 per cent as rate of interest to the union labour ministry for taking in-principle approval of the finance ministry.
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