The Employees Provident Fund Organisation (EPFO) has decided to raise interest payout to its over 50 million subscribers to 8.75 per cent, in light of a hike in RBI's key policy rates and the high inflation rate.
The central board of trustees of EPFO, its highest decision-making body, which met today, decided to raise interest rate on the corpus of the fund to 8.75 per cent for the financial year 2013-14 ending 31 March 2014.
With around Rs20,796.96 crore in total deposits during the current fiscal, the retirement fund body would require about Rs21,350 crore to pay 8.75 per cent interest to PF subscribers.
The EPFO had surplus funds, which enabled it to raise interest rate to 8.75 per cent for 2013-14 from 8.5 per cent in the previous financial year, EPFO stated.
"We have decided to recommend to the government 8.75 per cent rate of interest for 2013-14 to its subscribers," labour minister Oscar Fernandes said after a meeting of the EPFO trustees.
The finance ministry will have to approve EPFO's recommendation before the amounts are credited to the accounts of subscribers.
According to sources, the decision to enhance the rate was taken in view of the forthcoming Lok Sabha polls.
The CBT had raised the interest rate on PF deposits to 8.50 per cent in the 2012-13 financial year from 8.25 per cent in the previous fiscal, ie 2011-12.
"Payment of interest to the members is expenditure for the trust (EPFO), which is to be met out of its earnings. Thus, the rate of interest should be commensurate with the total earnings of the trust," the EPFO had said in its proposal to the trustees.
Besides the EPFO has launched a facility for filing electronic returns in order to reduce the workload of exempted establishments and ensure better monitoring of provident fund investments.
Launching the software the labour minister said the facility would benefit over 3,000 exempted establishments that were now required to file their monthly and annual paper returns.
Labour secretary Gauri Kumar called for close monitoring of exempted establishment as they manage the provident fund account of over 5.6 million members and the funds size of these exempted establishments had exceeded Rs1,59,000 crore.
She said work was underway on a software that would take care of transfers of the employees from unexempted establishments to exempted ones and vice-versa.
Central Provident Fund Commissioner K K Jalan stated that EPFO was committed to strengthen e-governance system and to provide better services to its stakeholders.
According to the EPFO, the electronic return has six parts - establishment details, trust details, employment details, contribution details, investment details and annual information.
The establishment details and trust details will be for one time entry and editing can be done later if required. Employment details and contribution details will be entered each month by all establishments complying as exempted under the EPF scheme.
Investment details will have to be entered by the parent trust every month. The participating units and branches can view the data. This part will have the details of receipts and payments, including investments by the trust.
Annual information will be made by the parent trust only at the end of each financial year, with details such as audit of accounts, interest declaration, maturity/interest in default etc.