The past few years have seen the interest rate on Employees' Provident Fund (EPF) headed downwards - from 8.8 per cent in 2015-16 to 8.65 per cent in the following fiscal, a four-year low. EPFO decision will come into effect after it is notified by the Finance Ministry.
"Post the colossal loss of nearly Rs 30,000 crore loot and scams being unravelled in the past seven days, Modi government has once again backstabbed the common people and honest tax payers of the country by reducing the interest rates in EPFO holders from 8.65 per cent to 8.55 per cent", he added. "Hopefully, the Finance Ministry will give its nod", Gangwar said, as reported by The Indian Express.
Despite the cut, the interest rate of the EPFO is higher than what is offered by other long-term investment schemes.
"The government has once again backstabbed the common people and honest taxpayers of the country by reducing the interest rates in EPFO holders from 8.65% to 8.55 per cent...."
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Trustees of the EPFO had a meeting where the decision was taken. The EPFO manages a corpus of over Rs 11 trillion. "We paid 8.65% last fiscal, which had resulted in a surplus of Rs 695 crore previous year", Gangwar said.
The EPFO has invested around Rs 44,000 crore so far in the ETFs.
He said the board of trustees had made a decision to reduce the administrative charges from 0.65 per cent to 0.50 per cent of total wages, which would reduce the burden on employers. At present, all those units employing 20 or more employees are mandatorily covered under the social security schemes run by the EPFO and the threshold has now been reduced to 10 workers.
The rates have been coming down since 2013-14when the government chose to align PF interest rates with small saving schemes such as PPF.