Last week, the Finance Ministry, giving a shock to the Employees’ Provident Fund Organization ( EPFO ) subscribers , announced 8.1 percent interest rates ( PF interest rates ) for the financial year 2021-22 .
This is the lowest level in four decades. For the financial year 2020-21, the rate of interest on EPF was 8.5 percent. The impact of this decision of the government will be on 65 million subscribers i.e. 6.5 crore jobseekers. In order to keep it attractive amid the declining interest rate, the government is considering increasing the limit of investment in the stock market from the EPFO fund. An important meeting of the EPFO Central Body of Trustees is going to be held at the end of this month, in which a decision can be taken on this idea.
At present, a maximum of 15 percent of the EPFO fund can be invested in the stock market. According to the report published in the Economic Times, it has been proposed by the EPFO to increase this limit to 25 percent. In fact, debt funds are not getting the required returns, in such a situation, efforts are being made to get the targeted return by increasing investment in equities.
Decision will be taken in the meeting of Central Body of Trustees
An important meeting of the Finance Investment and Audit Committee was held two weeks ago to consider this proposal. The proposal which will be presented by this committee will be presented before the EPFO Central Body of Trustees. A meeting of the Central Body of Trustees is proposed in the last month of June. After the discussion on the proposal in this meeting, it will be sent to the Labor and Finance Ministry for final approval.
The idea is to increase it in two phases
According to the report, the investment committee has decided to increase it in two phases. It has been suggested to increase the limit of 15 per cent to 20 per cent first and then to 25 per cent. Explain that Employee Provident Fund Organization invests in the stock market with the help of ETFs.
The rate of interest was reduced to 8.1 percent
In the month of March, the Central Board of Trustees decided to reduce the rate of interest on EPFO to 8.1 percent for the financial year 2021-22. Its effect will be on 65 million subscribers. This interest rate is the lowest since 1977-78. At that time the interest rate was 8 percent. The interest earned on Provident Fund is still higher than any other fixed income scheme.
