EPFO proposes 8.5 percent on PF deposits

Bangalore: The Employee's Provident Fund Organization (EPFO) has decided to pay an interest rate of 8.5 percent interest on provident fund deposits. The organization has about 4.49 crore provident fund subscribers and is one of the largest PF institutions in the world, in terms of constituent members and transactions handled. EFPO reported of Rs.139 crore deficits in the last fiscal and told that even a small increase of 0.25 percent will lead to a deficit of Rs.366.77 crore. More so, at the rate of nine percent on deposits, the losses would accumulate up to Rs.739.34 crore.
Sudha Pillai, Labor Secretary said, "We will be able to give 8.5 percent without dipping into our reserves."
There is no possibility of investing a portion of Rs.2.9-trillion- corpus of the pension fund in equity market in near future. "EPFO will not go for equity market because of large size of corpus and high risks," she said
An agenda note for next month meeting of the Central Board of Trustees (CBT) to be chaired by labour minister M Mallikarjun Kharge says, "There are no reserves which could be used as alternative option for additional funds for giving higher rate of interest than 8.5 percent this fiscal." CBT, the highest policy making body of EPFO, is meeting on July 4 to discuss and recommend the interest rate on PF deposits for the current fiscal.

The expected income of the organization during FY 2009-10 is Rs 12,994 crore.