The Employees’ Provident Fund Organisation (EPFO) trustees have retained the 8.75 per cent rate of interest on provident fund deposits for 2014-15. The move will benefit over five crore subscribers across the country.
In a meeting of Central Board of Trustees (CBT), chaired by labour minister Narendra Singh Tomar, it was also decided to increase the benefit under the Employees’ Deposit Linked Insurance (EDLI) scheme to a maximum sum assured of Rs 3.6 lakh from existing Rs 1.56 lakh. The sum assured under EDLI is provided in proportion to monthly wage ceiling, presently fixed at Rs 6,500. It would be enhanced to Rs 15,000 per month soon.
“EPFO will provide 8.75 per cent rate of interest on PF deposits for 2014-15,” Tomar told reporters after CBT meeting. As per practice, the EPFO trustees’ decision would be implemented after the concurrence of the finance ministry.
As regards the pattern of investment proposed by the finance ministry, the board said that it was not in favour of investing in equities and exchange traded funds (ETFs). However, it was decided to “recommend to make the pattern more flexible to further increase the percentage of investment in government securities,” a government statement said.
The statement added that the feasibility of deployment of EPF funds in AAA-rated PSUs through mutual agreement was also discussed and it was decided to go in for short-term borrowing of funds for participation in primary auction of securities.
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“This move is expected to result in EPFO getting to invest in securities at more profitable rates. The funds would be borrowed by means of Collateralised Borrowing and Lending Obligation (CBLO), corporate term repo and other such instruments for participation in primary auction of government securities and corporate bonds,” the statement added.
Without giving details about specific proposals, the labour minister said that the board decided to set up a PSU cell within its Investment Monitoring Cell (IMC) to negotiate with primary issuers (of bonds) on behalf of all fund managers. State-run NTPC has made a proposal seeking an EPFO investment of Rs 10,000 crore in its secured non-convertible bonds under a long-term agreement from 2014-15.
The board also decided to constitute a sub-committee for construction and contract workers. The committee shall examine the various issues regarding the coverage of employees engaged in this sector and shall recommend strategies to widen the coverage and enrollment in this area.The board was told that SBI has reduced its service charges for collecting PF contribution to Rs 1.80 per Rs 1,000 for net based transaction and Rs 2.40 per Rs 1,000 for physical transaction form the existing uniform rate of Rs 3. With PTI inputs