Employee Provident Fund to pay interest of 9.5%
Employee Provident Fund Trustees decides to pay interest of 9.5% on the provident fund deposits for 2010-11, the decision which will benefit around 4.71 crore employees. This decison has to be ratified by Finance Ministry.
In the meeting held on 15th Feb-2011 EPFO trustees decided for payment of interest to the tune of 9.5% and later reported that they have given all the clarifications sought by the finance ministry to increase the rate of interest by one percent. They are also hopeful that the ministry will soon give its approval and come out with a notification.
The board of trustees of EPFO is the highest policy making body of the Employees Provident Fund Organisation. The labour Minister Mr.Mallikarjun Kharge had also attended the meeting.
The other important policy decision taken by the board of trustees is not invest the part of the Employees provident fund in the stock market.
Earlier finance ministry mooted out this proposal which has not been rejected by board of trustees of EPFO.
The EPFO is a funding source for the government. The three schemes run by it —- the Employees Provident Fund, the Employees Pension Fund and the Employees Deposit Linked Insurance Fund — together have a corpus of over Rs250,000 crore (in unexempted schemes) and average collections of over Rs40,000 crore a year.
The corpus is predominantly invested in fixed income securities issued by the government and its entities. The investment pattern is 25% in government securities, 15% in state government bonds, 30% in public sector bonds.
The remaining 30% goes into any of the three categories as decided by the EPFO’s trustees.
Investment in private sector bonds is restricted to 10% of the total flows during the year. Mutual fund investments are restricted to gilt funds.
The return on the schemes is fixed by the trustees and stands at 8.5%, though it’s been upped to 9.5% for the year 2009-10 as a one-off payout.
However, there is no proposal as an date to raise the rate of interest payable on contributions made by Central Government Employees in General Provident Fund Scheme (GPF)
Source: The Times of India