NEW DELHI: Retirement
fund body EPFO is likely to provide nine per cent rate of interest on PF
deposits for the current fiscal to its over five crore subscribers, slightly
higher than 8.75 per cent paid in 2013-14.
"The initial
estimates indicate that the Employees' Provident Fund Organisation (EPFO) can
easily provide nine per cent rate of interest on PF deposits for 2014-15,"
a source said.
According to him, the
improved market conditions, especially after the formation of a new government
at Centre last month, have raised expectations of higher yields on various
investments by the body.
EPFO manages a corpus
of over Rs 5 lakh crore. It has received Rs 71,195 crore as incremental
deposits from its subscribers under social security schemes run by it during
2013-14, which is 16 per cent higher than Rs 61,143 crore collected by it in
2012-13.
The source said EPFO
also plans to unlock its investment of around Rs 55,000 crore in Special
Deposit Scheme (SDS). The government pays a fixed rate of eight per cent on SDS
to EPFO which is lower than other investment options available in the present
legal frame work.
EPFO is also expected
to improve yields or returns on its investment under the new norms prescribed
under an investment pattern notified by the Labour Ministry last year.
According to the new
pattern, EPFO can invest up to 55 per cent of its funds in debt securities
issued by banks and financial institution and other body corporates.
The new investment
pattern also allows EPFO to invest up to five per cent of its corpus into money
market instruments, including units of mutual funds, equity linked schemes
regulated by Securities and Exchange Board of India.
The new investment
norms also provide for parking up to 55 per cent of the EPFO funds in a new category
comprising government and state bonds.
Source:ET
