With a view to increasing the return on retirement funds, Employees Provident Fund Organization (EPFO) According to an ET report, Equity is considering a proposal to increase the investment limit to 25 per cent from the current 15 per cent. Its Finance Investment and Audit Committee also met about two weeks ago to discuss the matter.
According to the report, the proposal envisages increasing the equity exposure to 25 per cent in two phases – 20 per cent in the first phase and 25 per cent in the second phase. The plan is likely to be discussed in the meeting of the EPFO Central Board of Trustees (CBT) in the last week of this month. After the proposal is finalized in the EPFO, it will be sent to the finance ministry and labor ministry for their approval, according to the report.
According to the report, if the equity investment limit is increased to 25 per cent, then the EPFO can invest Rs 3,000 crore in the stock market every month.
Last week, the government confirmed a four-decade low interest rate of 8.1 per cent on Employees’ Provident Fund deposits for 2021-22. About five crore subscribers of the Employees’ Provident Fund Organization (EPFO) will be affected by this decision.
EPFO had decided to pay 8.1 per cent interest rate in March EPF The amount for 2021-22, compared to 8.5 per cent earlier. The 8.1 per cent EPF interest rate is the lowest since 1977-78, when it was 8 per cent.
The Ministry of Labor and Employment has conveyed the approval of the Central Government to credit 8.1 per cent interest rate for 2021-22 to each member of the EPF scheme, according to a PTI report quoting the EPFO office order issued on Friday. The Labor Ministry had sent the proposal to the Finance Ministry for consent.
The EPF interest rate provided for 2019-20 was the lowest since 2012-13, when it was reduced to 8.5 per cent. EPFO had provided 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18.
The interest rate was slightly higher at 8.8 per cent in 2015-16. It paid 8.75 per cent interest in 2013-14 as well as 2014-15, up from 8.5 per cent in 2012-13. The interest rate in 2011-12 was 8.25 per cent.
EPF is a compulsory savings scheme under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The scheme, which is managed under the aegis of EPFO, covers every establishment employing 20 or more persons.
The employees have to make a certain contribution towards the provident fund and the same amount is paid by the employer on a monthly basis. At the end of retirement or during service (under certain circumstances), employees get lump sum amount along with interest on PF contribution which accrues.
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