The interest on provident fund will be paid in one go and not in two instalments, the government has said, citing good financial health of the massive fund body that acts as a security cushion for a majority of employees across the country.
Labour Minister Santosh Gangwar today made the decision official to transfer the entire consolidated amount of annual interest payment to subscribers of the Employees’ Provident Fund Organisation (EPFO). The Finance Ministry has approved the move.
“Prime Minister Narendra Modi saw the EPFO is doing good work and he agreed to 8.5 per cent interest rate. This was notified today. As we speak the interest has started going into the accounts of at least six crore provident fund subscribers,” Mr Gangwar told NDTV.
On September 9, the EPFO said the pandemic had affected fund management and it would pay only a part of the instalment after today.
However, the situation became favourable for payment of interest in one go after the EPFO received good returns from sale of exchange traded funds (ETFs), a person with direct knowledge of the matter said.
An ETF, unlike regular mutual funds, trades like a common stock in the financial markets. The EPFO invests subscribers’ money in a range of instruments including ETFs to fetch higher returns, which help the salaried build their retirement fund.
All EPFO subscribers will now be able to see their updated account statement with the credit of 8.5 per cent interest for 2019-20.
Mr Gangwar said those who are retiring on December 31 will also get 8.5 per cent interest, news agency PTI reported.
The process for payment of 0.35 per cent interest for capital gain for 2019-20 is complete, he said. The interest of 8.5 per cent comprises 8.15 per cent from debt income and balance 0.35 per cent as capital gain from sale of ETFs, subject to their redemption by today.
