After a two-day meeting of the Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO), which ended here on Tuesday, it was decided to recommend an increase of 0.05% in the interest for Provident Fund deposits. Union Labour Minister Bhupender Yadav announced the decision after the meeting. The new rate, applicable for 2022-23, will be 8.15%.
The meeting also discussed the delay in implementing the Supreme Court’s recent verdict on higher PF pension. The Minister said the Centre’s effort was to implement the Supreme Court order. Members urged the EPFO to make the process of filing options simpler. They said as most of the applicants were senior citizens, they should not be asked to run around and make it as a cumbersome process. “Joint declaration, which has been sought, is tough to fulfil. Companies may not be maintaining the records beyond five to seven years. Retirees may have migrated to their native places. It should be made an easy process,” a member told The Hindu after the meeting. The EPFO is learnt to have agreed to issue a detailed clarification in layman’s language with a list of frequently asked questions and answers.
A government release said the interest rate would be officially notified in the government gazette after the approval of the Ministry of Finance, following which the EPFO would credit the rate of interest into its subscribers’ accounts.
“The CBT recommended the amount balancing both the growth and surplus fund to have safeguards. The recommended rate of interest of 8.15% safeguards the surplus as well as guarantees increased income to members. In fact, the rate of interest at 8.15% and the surplus of ₹663.91 crore is higher than last year,” the release added.
The Union Labour Ministry added in the release that the decision involves the distribution of more than ₹90,000 crore in the members’ accounts. The total principal amount with the EPFO is ₹11 lakh crore. In the last financial year, the total amount of interest was ₹77,424.84 crore for a principal amount of about ₹9.56 lakh crore.
“The total income recommended for being distributed is the highest till date. The growth in income and the principal amount is respectively more than 16% and 15% as compared to last financial year 2021-22,” the Ministry said.
Focus on safety
The Centre has been maintaining that the interest rate of the EPFO is higher than other comparable investment avenues available for subscribers. “The EPFO has consistently followed a prudent and balanced approach towards investment, putting highest emphasis on the safety and preservation of principal with an approach of caution and growth,” the Centre said.
The meeting also decided to map a five-year plan on capital expenditure so that by the end of five years, most of the EPFO offices get their own buildings and infrastructure. The budget for this is ₹2,000 crore.
Another issue that came up in the meeting was related to the EPFO’s investment in exchange-traded funds (ETFs). The EPFO is allowed to invest 15% of its deposits in ETFs. Members pointed out that only about 10% of the deposits are now invested in ETF despite securing interest of about 10% and asked the pension fund manager why it has not invested up to the limit of 15% in ETFs.
The issue of EPFO’s investments in Adani Group stocks was also raised in the CBT meeting. The officials told the members that the decision to invest in stocks is taken based on the top 50 shares of the National Stock Exchange.