The EPFO has promised to pay the interest accrued to its 60 million subscribers. This festive season will be a relief for the salaried class who have been struggling since the start of COVID season.
The Employees provident fund organization has announced the payment of interest promised earlier.
Previously the rate of interest of 8.5 was considered high because it was higher than all other government schemes.
The EPFO will pay interest to 60 million subscribers, and this news came as good news for people this Diwali season!
This move would be a heaven-sent offer to the salaried class, providing money for their expenses after losing jobs during COVID season.
What caused a delay in interest payment?
The central government employees will get this PF interest income and increase the Dearness allowance and dearness relief.
The interest was declared in March this year but got delayed due to the finance ministry’s doubts about the high rate of interest announced.
A top official from the labor ministry said, “the transfer of interest income would happen with immediate effect as the finance ministry has given consent for the same”.
The Finance Ministry’s doubt was about the surplus remaining with the EPFO after payment of interest.
The EPFO has assured the finance ministry that the interest payment will not affect the surplus amount.
EPFO has an estimated amount of 70,300 crores income during the previous year, and the interest payment will not have any financial impact on EPFO.
The central board of the EPFO approved the interest payment as they are expecting a stable financial position even after the payment of interest to the provident fund holders.
The manager of the retirement fund has permission from the finance ministry to pay the amount.
Is EPFO financially stable enough to pay the 8.5% interest amount?
The main reason for their financial stability is the rapid growth of the equity market since the EPFO’s last meeting.
That also adds to financial stability even though the actual realisation of money is not possible until liquidation. The BSE Sensex closed at almost 51,000 during March, and it rose to 58,129 this September.
It is expected to rise further during the end of this quarter.
The EPFO further added that it has come to this decision after considering the interest income from the debt funds and equity investments altogether.
It also informed that these two are the source from where the provident fund body got money to pay the interest.
Even after paying interest, it will have a surplus remaining in the account, facilitating it to pay future interest amounts.
The Employees provident fund pays a slightly higher interest rate than other provident funds like the general provident fund and public provident fund, which yields 7.1 and 6.8, respectively.
The retirement fund manager said,” During the last pandemic period, a lot of EPF holders withdrew money from their savings. But that didn’t affect the interest earnings of the fund”.
The retirement fund body further added that it knows EPF is a standard deduction from the employee income.
Still, when they receive the interest income this festival season, it will make them delighted ultimately.
The exchange-traded funds are famous for the high risk they carry with them. But from 2015-16, the EPFO has continuously invested its funds in these high-risk instruments fetching high returns.
The EPFO has 60 million subscribers, and it invests 15% of its funds in equity and the rest in debt instruments. This way, it expects to insulate from the shock received from stock market fluctuations.
How can I check my PF balance?
Once the interest is credited, every account holder can send a message to 7738299899. They can also give a missed call to know their increased balance since interest credit.