In line with the general decline in interest rates, India's retirement fund manager, the Employees' Provident Fund Organization (EPFO) has slashed the interest rate on provident fund (PF) deposits to a five-year low of 8.55 per cent for 2017-18 from 8.65 per cent last fiscal, for its over 6 crore subscribers.
As per EPFO, the reduction in interest rate by 10 basis points will leave a surplus of Rs 586 crore as against Rs 695 crore surplus left in the last fiscal with interest rate of 8.65 per cent. The rate of interest decided at the Central Board of Trustees meeting will be vetted by the finance ministry and after approval, the rate of interest will be credited into subscribers' account.
Labour Minister Santosh Gangwar has said that the EPFO received 8 per cent returns on its bond investments but it is able to pay 8.55 per cent rate because it has sold some of its investments in ETFs. He also explained that it is higher than 7.6 per cent provided to General Provident Fund and Public Provident Fund subscribers.