The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) will meet later this month to decide on the interest rate for retirement savings for the current fiscal.
It had declared an 8.1 per cent interest rate for 2021-22. With a spike in interest rates for bank deposits, there are expectations that the board may also increase the rate.
However, officials have pointed out that any decision on increasing the rate would be dependent on the surplus sum that the corpus had generated during the financial year.
The CBT is slated to meet for two days beginning March 25. While the EPFO has sent a letter to the trustees informing them about the date of the meeting, the exact agenda and venue have not been finalised as of now. Further communication on the agenda is expected over the next few days.
The subscribers of the EPFO have been hoping for better returns on the provident fund deposits as a consistently high inflation has been eating into their earnings.
The retirement fund body had announced a 45-year low interest rate of 8.1 percent for 2021-22 against 8.5 percent in 2020-21. EPFO invests85 per cent of its funds in debt instruments and the remaining 15 per cent in ETFs, in accordance with the investment pattern notified by the Centre.
The upper limit of 5 percent was enhanced to 10 percent of annual investments in 2016, and then again to 15 percent in 2017. The board had decided that allocation of investment for Nifty-based ETF would be 65-85 per cent, and the allocation for Sensex-based ETF would be 15-35 per cent.
In the last five years, the average return on investments in Sensex and Nifty companies(till 31 March 2022) has been 18per cent. In comparison, the return on debt instruments— bond yields — has been around 6.8 per cent on an average over the same period.
Besides, the issue of higher pension and the smooth implementation of the November 4 Supreme Court order along with the difficulties that pensioners are facing in accessing the pension portal is also likely to feature in the meeting.
