The Employees Provident Fund Organisation (EPFO) board has decided to pay only a part of the FY20 interest rate of 8.5 percent for now. Accordingly, the interest at 8.15 percent will be credited to nearly six crore EPF accounts, the EPF body said.
During a meeting, the board decided that the balance interest of 0.35 percent for 2019-20 will be paid in December through dilution of equity investments.
"In view of exceptional circumstances arising out of Covid-19, the agenda regarding interest rate was reviewed by the Central Board and it recommended the same rate @ 8.50% to the Central Govt. It would comprise of 8.15% from debt income and balance 0.35% (capital gain)from the sale of ETFs subject to their redemption by 31st December, 2020. It further recommended to account such capital gains in the income of the financial year 2019-20 as being an exceptional case," it said in a statement.
The Central Board of Trustees (CBT), EPFO's apex decision making body, is set to meet again in December and take a call on crediting the remaining 0.35 percent interest into subscribers' account.
According to reports, EPFO's ETF investments worth Rs 1 lakh crore have generated negative returns, which could hurt subscriber payout. Out of its annual deposits, the EPFO invests 85 percent in debt instruments and 15 percent in ETFs.
Despite COVID-19 related restrictions, the retirement fund body has settled 94.41 lakh claims totalling Rs 35,445 crore during the April-August period.
During this period,it has settled around 32 percent more claims as compared to the corresponding period last year, while the amount disbursed increased by around 13 percent.
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