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Hike in PF interest rate likely to be discussed at EPFO board meet today; here are other things to watch out f – CNBCTV18

The board of trustees of the Employees Provident Fund Organisation (EPFO) will hold its 229th meeting today where they are likely to discuss issues like a hike in provident fund (PF) interest rate, hike in minimum pension under the Employees’ Pension Scheme (EPS) from Rs 1,000 to Rs 3,000 and expansion of EPFO’s investment basket, reports said.

The board, comprising government officials, workers, and employers, is a government-created statutory body that was established under Section 5A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

PF interest rate

One the key issues likely to be discussed at the meeting is the hike in PF or EPF interest rates for the ongoing financial year. In financial year 2019-20, the EPFO had reduced the interest rate on provident fund deposits to a 7-year low of 8.5 percent. The pension fund regulator maintained the same rate in FY 2020-21.

In FY 19, the EPFO offered 8.65 percent return on deposits, while the rate was 8.55 percent in FY18. Speculation is rife that the EPFO may raise the interest rates for FY2021-22 in today’s meeting.

Fixed minimum pension

Another issue on the agenda is raising the fixed minimum pension from Rs 1,000 to Rs 3,000. The EPFO had fixed minimum pension at Rs 1,000 in 2014. However, central trade unions have called for a hike in the minimum level to Rs 6,000. Noting that the current minimum pension was inadequate, a Parliamentary Standing Committee on Labour headed by Biju Janata Dal MP Bhartruhari Mahtab has recommended the minimum pension be raised from Rs 1,000 to at least Rs 3,000.

“Even this meagre amount of Rs 1,000 is reportedly not being given to many pensioners owing to various reasons and pension amounts as low as Rs 460 are being disbursed,” the panel said in its report.

Expanding investment portfolio

The EPFO board of trustees may also explore possibilities of investing a portion of its corpus in alternative investment funds (AIFs) and infrastructure investment trusts (InvITs). This would expand the EPFO’s investment basket beyond government securities, bonds and exchange-traded funds (ETFs). On the other hand, the move will also boost investments in infrastructure.

The Union Budget FY22 had already signalled the government’s intention to push investments from institutions into infrastructure. In April 2021, the labour ministry had notified changes in EPFO investment options to include alternative investment funds.

(Edited by : Anshul)

First Published:  IST