The Central Board of Trustees of retirement fund body Employees’ Provident Fund Organisation (EPFO) is likely to finalise the interest rate for financial year 2020-21 in a meeting on March 4. The Board is likely to consider a lower interest rate than seven-year low of 8.5 per cent paid out to its subscribers for the previous financial year.
Though officially no agenda has been circulated yet for the meeting, CBT members said a discussion on interest rate issue is expected in the meeting slated to be held in Srinagar.
The Board is expected to lower the interest rate than last year’s level in view of higher number of withdrawals and lower contributions in the aftermath of the Covid-19 pandemic.
Till December 31, the EPFO had settled 56.79 lakh claims worth Rs 14,310.21 crore provided under the advance facility after the Covid-19 pandemic. 197.91 lakh final settlement, death, insurance and advance claims worth Rs 73,288 crore were settled during April-December. Exempted establishments, which run their own PF trusts had also settled 4.19 lakh claims disbursing Rs 3,983 crore.
In March last year, the EPFO’s Central Board of Trustees, headed by Gangwar, had recommended 8.5 per cent interest rate for EPF subscribers for 2019-20. Then in September, the CBT recommended splitting payment of the interest rate of 8.5 per cent for financial year 2019-20 into two parts, citing “exceptional circumstances arising out of Covid-19” but EPFO later began to credit it in one go from January onwards.
The Finance Ministry has been nudging the EPFO to reduce the rate to sub-8 per cent level in line with the overall interest rate scenario. Small savings rates range from 4.0-7.6 per cent, which have been kept unchanged for the January-March quarter. It had questioned the 2018-2019 interest rate of 8.65 per cent as well, besides the EPFO’s exposure to IL&FS and similar risky entities.