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More than six crore subscribers of the Employees Provident Fund Organisation (EPF) may get interest for FY20 in two parts – 8.15 per cent now – and the remaining 0.35 by December. The Central Board of Trustees (CBT), on Wednesday, reiterated its recommendation of 8.50 per cent interest rate for last fiscal.
Exceptional circumstances
In view of the exceptional circumstances arising out of Covid-19 pandemic, the agenda regarding interest rate was reviewed by the Central Board and it recommended the same rate of 8.50 per cent, comprising 8.15 per cent from debt income and balance 0.35 per cent (capital gain) from the sale of ETFs, subject to their redemption by December 31, said a Labour Ministry statement.
The Central Board further recommended to account such capital gains in the income of FY20 as being an exceptional case.
On the move to credit interest in parts, some members said: “The second part is conditional”. This means if some units of the ETF, where investment was made in 2016 are offloaded by December, then money for the second part will be made available, the members clarified.
However, a senior Labour Ministry official clarified that the entire interest would be credited at one go. “Post the recommendations of the CBT, the process for offloading ETF holding will start. We expect this to be completed by the time nod from Finance Ministry for interest rate come.” This will enable the interest to be paid in full.
The 8.5 per cent rate is the lowest in the last seven years. For FY19, the rate was 8.65 per cent. Now, there is a fear that if money at 0.35 per cent is not made available due to adverse market conditions or other reasons, subscribers will have to settle for8.15 per cent, which will be the lowest in many decades.
Additional succour
The CBT accorded approval for the amendment of Employees’ Deposit Linked Insurance Scheme (EDLI) 1976 to enhance the maximum assurance benefit to ₹7 lakh from the present maximum assurance benefit of ₹6 lakh. This amendment will provide additional succor to the families and dependents of members of the scheme in case of their unfortunate death while in service.
The CBT was also informed that the actuarial valuation of EDLI Fund has allowed for continuation of minimum assurance benefit of ₹2.5 lakh beyond February 14, and extension of minimum assurance benefit of ₹2.5 lakh to the family of those deceased members who were employed in multiple establishments during the 12 months preceding the month in which they died, as approved by the CBT EPF in its last meeting.