Are you an EPFO subscriber? Three major developments you need to know!
The EPFO on Thursday announced a slew of decisions for the organised sector workers including EPF interest rate, new benefit scheme and also a new investment category
The Employee’s Provident Fund Organisation (EPFO) delivered three important decisions on Thursday that will impact the pockets its four crore subscribers.
Moneycontrol takes a look at these important developments for organised sector workers:
Labour Minister says EPF for FY17 at 8.65 percent
While the Finance Ministry was mulling bringing down the EPF interest rate lower to 8.6 percent, trade unions were dismal regarding the same. However, on Thursday, Labour Minister Bandaru Dattatreya said EPFO subscribers will get 8.65 percent interest on provident fund deposits for 2016-17, as decided by the organisation's trustees in December.
As compared to last year, the interest rate has gone down from 8.8 percent to 8.65 percent.
The demonetisation move led to a falling rate regime with Reserve Bank of India (RBI) cutting lending rates and banks bringing down deposit rates. Following suit, EPFO too has reduced the interest rate. But, Dattatreya said, "If need be, I will talk to them (Finance Ministry). I have requested them to approve 8.65 percent. In any case, this amount (interest income) will be given to workers." Although, he didn't clarify when and how the interest will be provided.
As per the practice, the board's decision is concurred by the Finance Ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income or not.
More money after retirement
EPFO subscribers can cheer as the retirement body has decided to provide a loyalty-cum-life benefit of up to Rs 50,000 on retirement at 58 or 60 years who have contributed to the scheme for 20 years or more.
In a case of permanent disability, the EPFO board has decided to extend the benefit to the members even if they have contributed for less than 20 years.
First, the benefit will be passed on to the members on a pilot basis for two years after government approval and will be reviewed thereafter.
Who will get how much?
Members with average basic wages of up to Rs 5,000 will get a loyalty-cum-life benefit of Rs 30,000.
Members with wages of Rs 5,001-10,000 will be eligible for Rs 40,000 benefit.
Members getting more than Rs 10,000 monthly wage will be eligible for Rs 50,000 loyalty-cum-life benefit under the proposed scheme.
More investment opportunity
EPFO, Central Board of Trustees (CBT), approved the carving out of a special category of investments in liquid mutual funds.
CBT approved investing 10 percent of EPFO's corpus amounting to Rs 20,000 crore in liquid mutual fund schemes.The minimum rating of such schemes will have to be AA+ and with a minimum tenure of 30 days.