PF rate reduced to 8.65%; long-term subscribers offered loyalty bonus
15 April 2017
The interest rate on provident fund deposits has been reduced from 8.8 per cent in the two previous financial years -2014-15 and 2015-16 – to 8.65 per cent for the 2016-17 fiscal, as was decided by the Employees' Provident Fund Organisation (EPFO) in December.
Labour minister Bandaru Dattatreya, however, resisted finance ministry pressure to reduce PF interest rate by a further 50 basis points after it was lowered to 8.65 per cent, the lowest in seven years.
Dattatreya said there were no plans to reduce PF rates further and that the labour ministry and the finance ministry engage in an ongoing discussion of interest rates.
At an interest rate of 8.65 per cent, the EPFO would have a surplus of Rs158 crore, Dattatreya added.
On the other hand, the EPFO has decided to provide benefits of up to Rs50,000 at the time of retirement to subscribers who have contributed to the scheme for over 20 years. It has also decided to provide Rs50,000 benefit to subscribers who have permanent disability. However, these benefits are subject to approval from the government.
Meanwhile, the government has extended the deadline to for PF subscribers to submit Aadhaar cards to 30 April 2017 from the earlier deadline of 31 March 2017.
The deadline for digital life certificates for 5 million PF subscribers has also been extended to 30 April to link pension accounts with Aadhaar.
EPFO also announced an Employees Deposit Linked Insurance scheme, under which subscribers of the scheme will get a limited period minimum life insurance of up to Rs2.5 lakh. This will be valid till end-April 2019. However, this is yet to be notified by the government.