EPF: A calculation error that paid off well!

By Ushma Shah, www.apnapaisa.com

All of us who are contributing towards the Employee Provident Fund (EPF) have a reason to smile. Reason being, our EPF will fetch an additional 1% interest rate for the current fiscal. The interest rate offered by EPF has been constant at 8.5% for the last 5 years. The Employee Provident Fund Organization (EPFO) over a period of time has accumulated nearly Rs. 1731 crore which was lately discovered during audits. The Central Board of Trustees of the EPFO has decided to pass on this surplus through the way of a higher interest rate in the current fiscal at 9.5% per annum. This may in some way provide the employees a boost in their retirement corpus or if they planning to use the money for some other purpose. On 15th of September, 2010 EPFO decided to increase the interest rate of EPF from 8.50% to 9.50% for the financial year 2010-2011. As per the sources additional interest amount payable by the Employee Provident Fund Organization (EPFO) is  Rs.1, 600 crores. They will not require any financial help from the finance ministry as they discovered a calculation error in the interest suspense account, which amounts to nearly Rs. 1731 crore which was erroneously calculated to be Rs. 157 crore. The surplus in the interest suspense account is the main reason to increase the interest rate by 1% for the F.Y. 2010-2011 of the EPF. In most of the likely cases, the interest rate bonanza will be reverted to 8.5% the next year as it will be difficult for EPFO to generate the a return of 9.5% primarily or two major reasons