Hit by Covid-19, EPFO to Credit Interest in Two Tranches
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For the financial year 2019-20, the Employees’ Provident Fund Organisation (EPFO) will pay out the 8.5 per cent interest in two instalments, the central board of trustees (CBT) said on Wednesday.
CBT, the decision making body of EPFO, after meeting today has decided to credit 8.15 per cent interest first, followed by the remaining 0.35 per cent later in December.
The decision has been taken after the EPFO expressed concerns about the impact of Covid-19 on its earnings.
“There is no going back on 8.5 per cent rate for FY20, but the current situation has pushed us to go for two instalments. Some of the investments could not be encashed due to bad market situation, hence this new formula," said Virjesh Upadhyay, member of CBT.
In March, EPFO had slashed the interest rate by 15 basis points (100 bps is equal to 1 per cent) from FY2018-19 to fix it at 8.5 per cent for FY2019-20. The retirement fund body had projected that on paying interest rate of 8.5 per cent for 2019-20, it will be left with a surplus of INR 700 crore, as against INR 349 crore in the previous fiscal.
The interest payout of 8.5 per cent is the lowest in seven years, last paid in 2012-13.
EPFO reported that it has settled 94.41 lakh claims between April and August this year, disbursing about INR 35,445 crore to its members. Compared to the same period last year, EPFO has settled around 32 per cent more claims, while the amount disbursed increased by around 13 per cent.
“To help its members tide over the liquidity needs during this crisis, EPFO fast tracked settling of COVID19 advances and illness related claims,” as per an official statement from Ministry of Labour and Employment.