Big Bonus For 13 Lakh Salaried Indians: 8.5% Interest From Provident Fund Before Diwali!
To cheer millions of people ahead of the festive season, the Employees’ Provident Fund Organization (EPFO) is expected to credit the interest rate for FY21 before Diwali.
Making Salaried Class Happy Before Diwali
This move seems to make the salaried class happy as they have already faced months of job loss and income loss due to covid.
To make it happen, the EPFO’s central board has already approved its interest rate.
Further, the retirement fund manager has sought the finance ministry’s nod.
They are expecting to get a go-ahead soon, sources said.
Adding that “Authorities have sought the finance ministry’s approval on going ahead with the 8.5% interest rate for 2020-21. When the decisions were made about the interest, all factors have been taken into account and the fund manager is well placed to pay 8.5% rate,”.
Effects Of The Growth In Equity Market
Official said, “The equity market has grown very well since our last board meeting. This also gives us a cushion as our stock exposure has led to good earnings even though it’s notional till liquidation,”.
Basically, the interest rate recommended is a result of combined income from interest received from debt investments and income realized from equity investments, according to the retirement fund body.
So, “this has enabled EPFO to provide higher returns to its subscribers and still allowed it to keep a healthy surplus as a cushion for providing higher returns in the future,”.
Higher Returns Compared To Peers
The 8.5% interest rate seems to be favourable compared to the other provident funds such as general provident fund (GPF) and savings schemes such as the public provident fund (7.1%) and the national savings certificate (6.8%).
During the pandemic, millions of people drew funds from their EPFO savings.
However, the final calculation showed that the withdrawals did not hurt the earnings of the retirement fund manager, according to the government official.
While talking on the subject, the official said, “the last one-and-a-half years have been tough for the working class, including the salaried class. We do understand that the EPF interest rate is a return on their statutory deduction made every month but the payout expected by Diwali will cheer up their mood,”.