The Finance Ministry has given its nod for the Labour and Employment Ministry to fix the rate of interest payable to Employees Provident Fund subscribers at 8.25 per cent for 2011-12, instead of at 9.5 per cent paid in 2010-11.
The decision was taken in keeping with the finances of the Employees' Provident Fund Organisation, which manages the PF fund, a senior official said.
“They are paying from the interest they get from what they invested two or three years ago in financial institutions. So what is reflected now to the PF subscribers relates to the investment made earlier and the rate of interest that prevailed then in the market.”
The Board of Trustees of the EPFO, which includes representatives of labour unions too, approved the proposal to leave the financial decision on the interest rate to the Labour and Finance Ministries, the official said.
The Board, at its meeting on December 23 last, empowered the Labour Ministry to take the decision in view of the plea for reducing the interest this year (2011-12) to 8.25 per cent.
In 2010-11, the rate was fixed at 9.5 per cent, thanks to availability of a surplus fund of Rs. 1,731 crore.
Later, the Labour Ministry prepared a note mentioning that the rate for 2011-12 could be fixed at 8.25 per cent, to benefit about five crore PF subscribers. This is to ensure that the rate matched the interest rate being offered to Public Provident Fund scheme customers in scheduled banks.
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