EPFO approves increase in interest rate to 8.75 per cent

Also announces a 20 pc hike in deposit insurance scheme

The Employees’ Provident Fund Organisation (EPFO) on Monday announced an increase of 0.25 percent on PF deposit interest rates for the fiscal year of 2013-14. 

The interest rate will be 8.75 percent as opposed to 8.5 percent last fiscal, benefiting 5 crore subscribers. The Central Board of Trustees (CBT) of the EPFO took the decision in its meeting chaired by Labour Minister Oscar Fernandes. Trade unions were, however, demanding a rate increase to 9.5 percent.

“We have decided to recommend to the government 8.75 per cent rate of interest for 2013-14 to its subscribers,” Fernandes told reporters here. The EPFO’s recommendations would need the Finance Ministry’s concurrence to be credited into the accounts of subscribers.

The organisation also announced a 20 per cent increase in Employees’ Deposit Linked Insurance Scheme, 1976, as an interim measure. 

Under the scheme, an employee’s family can get a maximum assured sum of Rs 1.3 lakh in case of his or her demise during the service period. After a 20 per cent raise, the maximum amount would become Rs 1.56 lakh.

Housing scheme

The Labour Minister Oscar Fernandes also proposed a housing scheme for workers by deducing extra 10 per cent on basic wages by EPFO. Commenting on it, the Central Provident Fund commissioner assured to “work on the proposal”, saying that the minister has “a lot of experience”. The Central Board of Trustees initiated the process for selection of new multiple fund managers and constituted a committee to appoint a consultant for the purpose. 

At present, analytical company Crisil provides consultancy services to the EPFO. The board also reviewed the performance of its four fund managers since August, 2011.