The Union Labour Ministry has moved a proposal to the Finance Ministry for the transfer of entire consolidated amount of annual interest payments to Employees’ Provident Fund Organisation (EPFO) subscribers in one go, sources in the retirement fund body told NDTV. In September this year, the Labour Ministry had decided that the interest payable to provident fund subscribers would be paid in two parts, due to “exceptional circumstances arising out of COVID-19”.
According to a senior official, the EPFO has received good returns from the sale of exchange-traded funds (ETFs) and is in now in a position to transfer the entire tranche of interest payments to subscribers in a single instance.
An Exchange-Traded Fund (ETF), unlike regular mutual funds, trades like a common stock on a stock exchange.
The retirement fund body had, in September, decided to keep the interest rates unchanged at 8.5 per cent for the current financial year. However, due to exceptional circumstances arising out of Covid-19, the Central Board of Trustees had chosen to break the interest rate in two parts.
“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 at 8.50 per cent to the central government. It would comprise of 8.15 per cent from debt income and balance 0.35 per cent (capital gain) from the sale of ETFs subject to their redemption by 31st December, 2020,” the retirement fund body had said in September
In March, the retirement fund body had lowered the interest rate applicable to Employees’ Provident Fund scheme to 8.5 per cent for 2019-20 from 8.65 per cent the previous year.
The EPFO-managed Employees’ Provident Fund is a pension scheme that enables salaried persons to build a corpus for their retirement, with an equal contribution from their employers.
