New EPFO calculation for interest

 The Employees’ Provident Fund Organisation (EPFO) has formulated a new accounting pattern to compute the part of PF deposits that is invested in equity related funds. The new accounting pattern will also be applicable to exempted establishments, and those establishments that manage the PF of their employees through private trusts. 

The move has taken place keeping in mind the nature of investments. Earlier, the EPFO invested in fixed income securities, and was receiving interests on a quarterly, half-yearly or yearly basis. After the decision of minimum investment of 5 per cent of PF corpus in ETFs, the accounting pattern required a change, because the dividends in these funds are declared at the end of the year.

“In a major policy decision, the Finance Investment and Audit Committee (FIAC) of the CBT, EPFO approved the accounting policy and method of accounting for equity and related investments. This decision is taken with a view to bring procedural clarity and also to serve as a guide to the various exempted establishments, who have to now invest 5 per cent of their corpus in the equity market as per government guidelines,” the EPFO said in a statement on Thursday.

The PF Commissioner K K Jalan also took a stock of the performance of the EPFO in the month of December. He noted that for the period April to December, 2015, EPFO settled 90.6 lakh claims, out of which, 40 per cent was settled within three days, and close to 80 per cent within 10 days. More than 96 per cent of the claims were settled within the stipulated 20-day period.