EPFO TO REDUCE EPF RATE TO 8.55%

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CBT is the highest decision-making body of the EPFO. It is chaired by the labour minister and has representatives of the Central and State governments, besides those from employers and employees.

The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) recommended slashing the interest rate for its 5-crore subscribers to a five-year low of 8.55 per cent for the current financial year of 2017-18 from 8.65 per cent last year.

 Labour and Employment Minister Santosh Gangwar said that at a rate of 8.55 per cent, the EPFO will have a surplus of Rs 586 crore.

Labour ministry sources also said the reduction in interest rate is in line with advice from the Finance ministry, indicating that the idea behind an interest rate cut this year is to build a good buffer to enable a hike in EPF interest rate next year. Two years ago, the Finance Ministry had proposed to reduce the interest rate on EPF from the earlier 8.8 per cent to 8.7 per cent for the fiscal 2015-16. However, even the minor reduction was opposed by the trade unions which had threatened an agitation forcing the government to retain the 8.8% rate of interest.

However for the subsequent year, the interest rate was reduced to 8.65 per cent in view of the falling interest rates in the economy and keeping the EPFO earnings in view. EPFO has nearly 6 crore subscribers. According to reports, after payment of 8.55 per cent interest for 2017-18, the organisation will be left with a surplus of Rs 586 crore against Rs 695 crore in the previous financial year.