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Over 4.7 crore employees will get 9.5 per cent interest on provident fund deposits for the year 2010-11.
The Finance Ministry on Thursday approved the higher interest rate for deposits with the Employees Provident Fund Organisation (EPFO) for 2010-11.
After the approval, the Labour Ministry notified the 9.5 per cent interest rate. The EPFO had been paying 8.5 per cent interest on PF deposits since 2005-06.
In a letter to the Central Provident Fund Commissioner (CPFC) on Thursday, the Labour Ministry sought the crediting of 9.5 per cent interest rate for 2010-11 to the account of each member, but on the condition that the 4.72 crore accounts should be updated within six months.
“If any shortfall in interest suspense account is noticed, then the same should be adjusted in the interest rate to be fixed for the next year (2011-12),” it said.
Sources indicated that the Finance Ministry agreed to a higher rate of return of 9.5 per cent for 2010-11 after it found correct the CPFC calculation regarding Rs 1,731 crore surplus in the interest suspense account
In September last year, the EPFO's apex decision making body – The Central Board of Trustees – had decided on a 9.5 per cent rate of return on retirement savings in 2010-11 after it found a surplus of Rs 1,731 crore.
Refusing to ratify the said rate of return, the Finance Ministry had earlier argued that the surplus shown by the Ministry was not real after the Comptroller and Auditor General report called the EPFO's so-called surplus unverifiable.
According to sources, the Finance Ministry approved 9.5 per cent interest after the intervention of the Finance Minister, Mr Pranab Mukherjee.
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