Monday, April 17, 2017

Finance ministry okays 8.65% interest on Provident Fund

Employees will get 8.65% interest on provident fund balance for 2016-17. For last year 2015-16 the interest rate was 8.80%

New Delhi, April 16 (PTI): The finance ministry is believed to have permitted the labour ministry to go ahead with 8.65% rate of interest on employees’ provident fund for 2016-17, which will benefit over four crore Employees’ Provident Fund Organisation (EPFO) members. The finance ministry in its communication to the labour ministry has, however, put a rider that the interest rate should not result in a deficit for the retirement fund. This will enable the labour ministry to provide 8.65% rate as decided by EPFO trustees.

“The finance ministry had earlier suggested an EPF rate slightly lower than approved by the trustees as it wanted the interest to be aligned with the rates of small savings”.  The finance ministry has been asking the labour ministry to rationalise the EPF interest rate in view of lowering of returns on various administered saving schemes like PPF. The government generally ratifies the rate of return approved by the CBT because the EPFO is an autonomous body and provides interest on EPF deposits from its own income.

Moderator’s remark: In the wake of the decision as above, the interest rate in PF of the Bank Employees is now expected to be reduced from 8.80% to 8.65% for FY 2016-17. Bank employees will now loose interest of Rs 1,500 each year for every ten lakh in their PF accounts. Bad news indeed.

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