The interest on the pension fund will be paid in one go and not in two installments, the government said, citing the good financial health of the massive fund body that acts as a security pillow for most employees across the country.
The Minister of Labor, Santosh Gangwar, today officially decided to transfer the entire consolidated amount of the annual interest payment to the subscribers of the Organization for the Prevention of Employees’ Fund (EPFO). The Ministry of Finance approved the move.
“Prime Minister Narendra Modi saw that EPFO is doing a good job and agreed to an interest rate of 8.5%. This was announced today. As we speak, interest has started to go into the accounts of at least six plan fund subscribers, “Mr Gangwar told NDTV.
On 9 September, EPFO said the pandemic had affected the management of the funds and that it would pay only part of the tranche after today.
However, the situation has become favorable for the payment of interest at once, after EPFO received good returns from the sale of exchange traded funds (ETFs), said a person with direct knowledge about this issue.
An ETF, unlike ordinary mutual funds, trades as a joint stock in the financial markets. EPFO invests subscribers’ money in a number of instruments, including ETFs, to achieve higher returns, which help employees build their pension fund.
All EPFO subscribers will now be able to see their updated account statement with an 8.5% interest credit for 2019-20.
Mr Gangwar said those retiring on December 31 would also receive 8.5% of interest, the PTI news agency reported.
The 0.35% interest payment process for the capital gain for 2019-20 is complete, he said. The 8.5 percent interest rate includes 8.15 percent of the debt income and the balance of 0.35 percent as capital gain from the sale of ETFs, subject to their redemption to date.