The Central Board of Trustees (CBT) which is the apex decision making body of Employees' Provident Fund Organisation (EPFO) said it will stick to the pay out 8.5 percent interest to its EPF subscribers for 2019-20. However, the promised EPF interest to over 6 crore subscribers will be paid in two tranches.
In a board meeting held on Wednesday, the retirement body decided that it will credit 8.15 percent out of the promised 8.5 percent interest immediately into is subscribers' account. This amount would be accrued from the debt investments made by EPFO.
The balance 0.35 percent of the interest will be credited in to accounts of EPFO subscribers in December and will be raised via sale of equity Exchange Traded Funds or ETFs held by EPFO which are subject to redemption by December 31, 2020. The move to make staggered payment of EPF interest was taken due to exceptional circumstances arising out of COVID-19.
In the board meeting held on March 5, EPFO had decided to cut interest rate to 8.5 percent for 2019-20 from 8.65 percent which it paid in the previous year.
According to sources, after paying the first installment of EPF interest i.e. 8.15 percent out of 8.5 percent, the retirement body would face a shortfall of about Rs 2,500-2,700 crore which would be met by sale of equity ETFs.
In its board meeting held on Wednesday, EPFO also approved amendments to Employees’ Deposit Linked Insurance Scheme. Under Employees’ Deposit Linked Insurance Scheme, EPFO has decided to enhance the maximum assurance benefit to Rs 7 lakh from the present Rs 6 lakh. The amendment will provide additional succor to families and dependents of members of the scheme in case of death while service.