EPFO to decide on interest rate on 4 July

Subscribers of the state-run employees provident fund are likely to continue to earn an interest rate of 8.5 per cent in 2009-10. The fund has around 4-crore subscribers.

The central board of trustees of the Employees Provident Fund Organisation (EPFO) will meet 4 July to decide on the interest rate which, according to Sudha Pillai, labour secretary, is when they will consider to maintain at the rate of 8.5 per cent.

The EPFO is one of the largest institutions of its kind globally in terms of the constituent members and the number of transactions handled. The EPFO expects to earn Rs12,994 crore in this fiscal.

According to officials the EPFO would manage to retain a surplus of Rs6.4 crore if it paid its subscribers at a rate of 8.5 per cent.

However, a small increase of 25 basis points would lead to a deficit of Rs366.77 crore and if the rate is 9 per cent the losses would amount to Rs739.94 crore.

With the introduction of three private fund managers ICICI Prudential, HSBC Asset Management and Reliance Asset Management, the performance of the fund has received a boost and it will be only the first time in seven years that the social security fund would be able to pay investors without having to dip into its reserves.