According to an official, return on EPFO investments this year have been strong while the Covid withdrawals have come down significantly. With better returns expected on equity investment, there is a possibility of either retaining the interest ra...
By ET Bureau | Updated:
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The retirement fund body had announced the interest rate of 8.1% for 2021-22, which was the lowest in four decades.
The central board of trustees of the Employees' Provident Fund Organisation will meet on March 25-26 to decide on the interest rates on provident fund deposits for 2022-23.
While the income of the retirement fund body of EPFO is being worked upon to arrive at the interest rate for the current fiscal year, official sources said it is likely to hover around 8%.
According to an official, return on EPFO investments this year have been strong while the Covid withdrawals have come down significantly. With better returns expected on equity investment, there is a possibility of either retaining the interest rate at 8.1% or bringing it a tad lower to 8%, the official said.
"The government is unlikely to go for any major tweaking in the interest rates as it heads into key state assembly elections this year followed by general elections next year," another official said.
A member of the Finance Investment and Audit Committee of EPFO confirmed to ET that the CBT meeting has been scheduled for the last week of March and the FIAC could meet a day before to recommend the interest rates for 2022-23. "The venue and the agenda of the meeting has not been shared so far," the FIAC member said.
"However, no other agenda is more important than the interest rate for the current year. I think it will be this only plus other administrative issues," he said.
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The retirement fund body had announced the interest rate of 8.1% for 2021-22, which was the lowest in four decades and was significantly lower than 8.5% credited in the preceding year. This was on an estimated income of ₹76,768 crore with ₹450 crore as surplus.
EPFO started investing in equities in 2015-16, putting 5% of its incremental corpus in the first year, 10% in the second year and 15% in the subsequent years. It has made a cumulative investment of ₹1.7 lakh crore, out of which over ₹22,000 crore have been redeemed till March 31, 2022.
EPFO invests its incremental corpus of ₹1.5 lakh crore into equity in the form of exchange traded funds (ETFS), both on the Nifty and the Sensex platforms.
