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EPF interest rate lowered by 15 bps to 8.5% for FY20

The interest rate is a big sentiment booster and any cut may further hit the employee sentiment.

, ET Bureau|
Last Updated: Mar 05, 2020, 03.45 PM IST
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EPFO slashes interest rate on deposits to 8.5% for FY20
EPFO slashes interest rate on deposits to 8.5% for FY20
Salaried employees will get 0.15% lower returns on their provident fund deposits this year with the Employees’ Provident Fund Organisation announcing a 15 basis point reduction in the interest rate on PF deposits in 2019-20 compared to 8.65% in 2018-19 on the back of lower yields on its investments.

The decision to this effect was taken at the just concluded central board of trustees meeting of EPFO. ET had reported last week that government would.cut interest rate on PF deposits by 15 basis points.

The economic slowdown which has impacted EPFO’s earnings on debt market instruments including government securities and fixed deposits.

EPFO has an investment of over Rs 18 lakh crore of which barely Rs 4,500 crore has been in DHFL and IL&FS. EPFO invests 85% of its annual accruals in debt market and 15% in equities through exchange traded funds. As on March 31, 2019, EPFO has made a cumulative investment of Rs 74,324 crore fetching a return of 14.74%.

Labour minister headed central board of trustees of EPFO is the apex decision making body of EPFO which manages a corpus of over Rs 12 lakh crore and has an active subscriber base of six lakh.
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