Authorities has mentioned that provident fund rate of interest was lower resulting from prevailing market situations
Staff’ provident fund rate of interest was slashed to eight.1 per cent for 2021-22 on Saturday by the workers provident fund organisation (EPFO). Labour Minister Bhupender Yadav justified the retirement physique’s choice by citing the prevailing worldwide and market state of affairs.
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The board of trustees of EPFO right now slashed the rate of interest to eight.1 per cent for 2021-22, the bottom fee since 1977-78, when it was 8 per cent. The rate of interest was 8.5 per cent in 2020-21.
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The choice was taken throughout the assembly of the EPFO’s central board of trustees, which was held in Guwahati.
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Labour Minister Bhupender Yadav whereas elaborating on the board’s choice mentioned that the rate of interest was finalised after protecting in thoughts the prevailing worldwide situations and the market state of affairs.
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“We made the advice of 8.1 per cent rate of interest after reviewing the prevailing market state of affairs in addition to the worldwide state of affairs. Additionally we can not take excessive danger devices as we’ve to maintain social safety and market stability in thoughts, and subsequently the choice was taken,” Mr Yadav mentioned.
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The minister mentioned that even after paying the speed of 8.1 per cent, EPFO has a surplus of round Rs 450 crore with it. Rates of interest are mounted primarily based on the earnings of the retirement fund physique on the deposits it has. Whereas the corpus has gone up by 13 per cent, curiosity revenue is up solely 8 per cent.
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Worker representatives sought greater rates of interest however the Central Board of Trustees (CBT) settled for 8.1 per cent, PTI reported. The board’s advice shall be despatched to finance ministry quickly.
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As soon as finance ministry ratifies the board’s choice, EPFO will direct its area places of work to credit score the curiosity revenue calculated on the new fee of 8.1 per cent for 2021-22 within the subscribers’ accounts.
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In March 2020, EPFO had lower the rate of interest on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20.
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Provident fund financial savings are obligatory below the workers’ provident funds and Miscellaneous Provisions Act, 1952. At the least 12 per cent of an worker’s primary wage is compulsorily deducted to be saved in provident fund, whereas an employer co-contributes an equal quantity.
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The Coronavirus pandemic has strained EPFO’s earnings. EPFO delayed funds for 2019-20 and paid the curiosity in two installments, deriving from two sources of its investments – 8.15 per cent from debt investments and 0.35 per cent from the fairness portfolio.
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