The Employees’ Provident Fund Organisation said on Wednesday that it will rework the interest payout of 8.5% for financial year 2019-’20 in two separate installments of 8.15% and 0.35%, Mint reported. While the 8.15% interest will be credited first to the subscribers’ accounts, the balance will be credited in December.
“There is no going back on 8.5% rate for FY20, but the current situation [coronavirus pandemic and the resultant economic distress] has pushed us to go for two installments,” Virjesh Upadhyay, a central board trustee of the EPFO, said. “Some of the investments could not be encashed due to bad market situation, hence this new formula.”
The retirement fund believes that after paying out the 8.5% interest, it will be left with Rs 700 crore. In 2019-’20, the fund was left with a surplus of Rs 349 crore.
The EPFO’s earnings in March were lower than expected, due to the pandemic. They were lower than the Rs 3,500 crore to Rs 4,000 crore the EPFO had expected to get from dividends and sale of exchange traded funds. The 8.5% interest rate announced in March was the lowest in seven years.
Wednesday’s decision was made at a meeting of the central board of trustees of the retirement fund. EPFO has six crore subscribers, according to The Indian Express.