The Finance Ministry has approved the employees’ provident fund (EPF) interest rate at 8.65% for the 2016-17 fiscal, which will benefit over four crore subscribers of Employees’ Provident Fund Organisation (EPFO). According to EPFO estimates, the fund will see a surplus after providing 8.65% interest rate for the last fiscal.
As per the practice, the Central Board of Trustees’ (CBT) decision is concurred by the Finance Ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income or not. Once the Finance Ministry ratifies the rate of interest approved by the CBT, it is credited into the account of EPFO members for that particular financial year.
However, the Finance Ministry in its recommendation to the Labour Ministry has put a rider that the interest rate should not result in a deficit for the retirement fund. In December last year, a reluctant Finance Ministry had been nudging the Labour Ministry to lower the EPF rate to below 8.65% as approved by the EPFO trustees, as it wanted the interest to be aligned with the rates of small savings. Furthermore, Labour Minister Bandaru Dattatreya has been maintaining that the EPFO subscribers would be provided 8.65% rate of interest for 2016-17. Earlier, he had said that the CBT had decided to give 8.65% and added that they would have surplus of Rs 158 crore on providing 8.65%.