Thursday 26 October 2017

Government retains General Provident Fund interest rate at 7.8% for Oct-Dec

NEW DELHI: Employees of central government, Railways and defence forces will get 7.8% interest on their retirement savings for the October-December quarter, as they did in the previous threemonth period.
The government on Wednesday retained the interest rate for general provident fund (GPF) and other related schemes, in line with that for public provident fund (PPF).

“The Government of India has announced that during the financial year 2017-18, accumulations at the credit of subscribers to the GPF and other similar funds shall carry interest at the rate of 7.8% with effect from October 1 to December 31, 2017,” a finance ministry notification said.

Last month, the government had kept the interest rate on PPF unchanged at 7.8% for October-December, in line with the rates for small savings schemes. This may put pressure on the Employees’ Provident Fund Organisation (EPFO) to lower interest rates on its deposits.

The central board of trustees of EPFO is likely to consider the interest rates for 2017-18 at its upcoming meeting next month. EPFO had declared interest rate of 8.65% for 2016-17, down from 8.8% for 2015-16.

The finance ministry has been asking the labour ministry to rationalise the EPF interest rate in view of lowering of returns on various administered savings schemes such as PPF.

EPFO has over 50 million subscribers comprising employees other than those working in government organisations. The government generally ratifies the rate approved by the central board of trustees because the EPFO is an autonomous body and provides interest on EPF deposits from its own income.

The MoF takes a decision after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income. Once the finance ministry ratifies the rate, it is credited into the account of EPFO members for that particular financial year. 
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