The Indian government may mandate higher interest rates on its retirement fund scheme: Report
- The Employees' Provident Fund Organisation (
EPFO) may reportedly raise interest rates from the current level at 8.55%, but if not, the current interest rates will not be narrowed further.
- According to A Mint report, the retirement body reportedly earned a surplus of nearly ₹6 billion at the existing interest rates in 2018.
- On an average, the interest rate of Public Provident Fund and the National Savings Certificate in 2018 was recorded to be 7.7%, said the report.
Though the rates are expected to go higher, but if not, the current interest rates will not be narrowed further, Mint reported citing a member of EPFO's central board of trustees. Even if the current interest rates follow, it will be a favourable decision for the salaried employees.
The interest rates are floated by the EPFO in December every year. However, this year, it will be declared on 1 February because of the ongoing audit. On average, the interest rate of Public Provident Fund and the National Savings Certificate in 2018 was recorded to be 7.7%, said the report.
The Indian government recently made amendments in its regulations covering its retirement schemes — including directives of making tax-free withdrawals available to employees under National Pension System (NPS) and boosting the incentives to around 50% for health workers. The new interest rates will likely be in check with such announcements.
According to the report, EPFO, which manages savings of over ₹11 trillion, reportedly earned a surplus of nearly ₹6 billion at the existing interest rates in 2018. If required, EPFO may use its equity investments, which have an estimated return of around 12% annually. Presently, it has invested over ₹500 billion in stock market.
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