Important Decision On PF Money Today. What You Can Expect

The provident fund body - the Employees Provident Fund Organisation or EPFO - is today likely to decide on the interest rate for the current fiscal year. The move will impact over four crore employees who contribute part of their salary towards the provident fund kitty.

EPFO is likely to retain 8.8 per cent interest rate on provident fund deposits for the current fiscal year, reported Press Trust of India, citing sources.

Provident fund subscribers had received an 8.8 per cent interest on their deposits last year.

Payment of 8.8 per cent interest will leave a deficit of Rs 383 crore and EPFO wants to offset it will Rs 409 crore surplus with it, the Press Trust of India report said.

Earlier this year, the Finance Ministry had had decided to lower interest on provident fund deposits for 2015-16 to 8.7 per cent from the 8.8 per cent approved by the Central Board of Trustees or CBT, headed by the Labour Minister.

The Central Board of Trustees is the apex decision-making body of EPFO.

(Read: PF Rule Changed For Earning Of Interest, 10 Crore Employees To Benefit)

Following protests by trade unions, the government later rolled back its decision and approved an 8.8 per cent rate of interest on provident fund deposits for 2015-16.

The interest rate on provident fund would be keenly watched as the overall interest rate in the financial system has fallen sharply over the past one year. The government had earlier this year sharply lowered the interest rate on small savings schemes like on Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi Account.

According to the new norms on small savings schemes effective from April 2016, interest rates are revised every quarter as opposed to the earlier norm of annual revision.

The popular Public Provident Fund will fetch an interest rate of 8 per cent for the December quarter. The rate of interest for 5-Year Senior Citizens Savings Scheme and 5-Year National Savings Certificate had been reduced to 8.5 per cent and 8 per cent, respectively.

The Employees Provident Fund Organisation will also today consider a proposal to lower administrative charges the retirement fund body charges to employers for managing the subscribers' money. EPFO may reduce the administrative charges to 0.65 per cent of from 0.85 per cent at present, the Press Trust of India reported.

(With inputs from PTI)