The Employees’ Provident Fund Organisation (EPFO) on Wednesday decided it will rework the interest payout of 8.5% for financial year 2019-20 in two separate instalments of 8.15% and 0.35%, Livemint has reported.
This was decided today at a meeting of the central board of trustees (CBT), the retirement fund manager’s apex decision-making body. The decision came after EPFO informed the board that its expected earnings as discussed in March, were hit by the impact of the coronavirus pandemic on return on investments.
Hence, while the 8.15% instalment will be credited to the subscribers’ account first, the 0.35% one will be credited in December.
“There is no going back on the 8.5% rate for FY 20, but the current situation has forced us to go for two instalments. Some of the investments couldn’t be encashed due to bad market situation, hence this new formula”, Virjesh Upadhyay, a central board trustee, was quoted as saying.
The interest payout rate of 8.5% for 2019-20, which was announced in March, is the lowest in seven years. It is also 15 basis points below the financial year payout for 2018-19.
Also, a rate of 8.5% was last paid in 2012-13.
EPFO had projected in March that after an 8.15% payout in 2019-20, there will be a surplus of Rs 700 crore. In 2018-19, it had a surplus of around Rs 349 crore.
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