EPFO News: The Employees’ Provident Fund Organization (EPFO) is considering creating an Interest Stabilization Reserve Fund. Through this, a fixed interest can be given on the amount deposited in the PF account amidst all kinds of fluctuations. The Ministry of Labor and Employment and EPFO officials are studying internally about creating the fund. This will benefit seven crore EPFO members across the country.
Officials associated with the matter say that EPFO invests a part of the PF fund in the market. Many times the organization gets low returns on Exchange Traded Funds (ETF) and other investments, the loss of which is directly borne by EPFO members. Especially when there is a sharp fluctuation in the stock market, it also affects the amount EPFO receives on investment. In case of low returns, EPFO has to cut the interest rates of PF.
The proposed plan will work like this
To deal with this situation, EPFO plans to create a fund that will keep the return on investment stable. This will help in providing interest at a stable rate to EPFO members.
Sources say that under the proposed scheme, a reserve fund will be created by separating the surplus from the interest earned every year, which can be used to ensure a constant and stable interest rate in any year. This will help prevent inconsistent rate cuts in any situation in the stock market. Seven crore EPFO members across the country will benefit from this decision.
Decision possible in next few months
The ongoing talks on creating the fund are still in the initial stages. Officials say that studies are going on on many points. After studying everything in detail, a report will be prepared, on which the board related to EPFO will take the final decision. If everything goes as per plan, a final decision on creating the fund can be taken in the next four to six months.
EPFO started with 3% interest rate
If we look at the history so far, EPFO started with an interest rate of 3 percent. In 1952-53, EPFO provided 3 percent interest to its members, which increased to 12 percent in 1989-90, which remained constant till 2000-01. In the intervening years, EPFO also provided bonus along with interest. Till now the interest rate is 8.25 percent.
Meeting to consider interest rates on February 28
The Central Board of Trustees (CBT) of EPFO will meet on February 28 to decide on the interest rates for the financial year 2024-25. The meeting is likely to be held in Delhi, the venue of which will be decided in a day or two.
Sources say that this time the possibility of change in interest rates is limited. The board can decide to keep the interest rates stable or increase it marginally. However, sources have rejected the speculations that EPFO can cut the interest rates this time. The possibility of reduction is very less.
