Linking of GPF Interest Rates With EPFO

Linking of GPF Interest Rates With EPFO

The rates of interest on General Provident Fund (GPF) is 8% for the period from 1.4.2011 to 30.11.2011 and 8.6% from 1.12.2011 to 31.3.2012, whereas the rate of interest on EPF for the financial year 2011-12 is 8.25%. Rate of interest on EPF is fixed on the recommendation of the Central Board of Trustees (CBT) by the Employees Provident Fund Organisation (EPFO), Ministry of Labour and Employment based on the income earned on the accumulated fund during the financial year. However, rate of interest on GPF is generally fixed after taking into consideration the average secondary market yields on government securities of similar maturity. 

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today

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Amount under Employees Pension Fund Account

Amount under Employees Pension Fund Account

The Union Labour & Employment Minister Shri Mallikarjun Kharge has informed the Rajya Sabha today that Total amount held under Employees’ Pension Fund Account as on 31 March 2011 is Rs. 1,42,760.89 Crore. Interest income earned on the investment during 2010-11 is Rs. 10,732.67Crore. 

The stipulation regarding administrative expenses to be met from Employees Pension Fund has been done away with from 6th January 2007. As per Employees’ Pension Scheme, 1995, all administrative expenses are to be met from the Central Administration Account of the Employees’ Provident Fund. 

The Minister was replying to a written question in this regard.

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Track your PF account on web in 3 months

A circular was issued on May 24, asking all regional offices to complete updating of 2008-09 accounts by May 31, and that of 2009-10 by June 30, say reports.

There is some good news for more than 47mn subscribers to the Central Government's Employee Provident Fund scheme. You will soon be able to keep a close tab on your PF account on the Internet, according to reports.

The Employees' Provident Fund Organization (EPFO) has reportedly posted the details of the accounts' status of all its 120 offices on its website.

A circular was issued on May 24, asking all regional offices to complete updating of 2008-09 accounts by May 31, and that of 2009-10 by June 30, say reports.

The EPFO's move to put in place a software for updating accounts annually across its 120 offices will help it meet the Finance Ministry's goal of updating all pending accounts by September.

In March this year, the Finance Ministry had approved the 9.5% interest rate announced by the EPFO for its 47.2mn subscribers for FY 2010-11 on the condition that it would update the pending accounts within six months.

The EPFO has updated 28.7mn accounts since then, according to reports.

The EPFO handles a corpus of about Rs. 3.5 lakh crore annually.

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SBI sole EPF manager for interim period

State Bank of India (SBI), the nation’s biggest lender, has been entrusted to manage the entire Rs. 3.3 trillion Employees’ Provident Fund (EPF) by the labour ministry.

The EPF is the largest social security fund in the country.

The decision to give the entire amount to SBI till new fund managers are appointed was taken by the Central Board of Trustees (CBT), the top decision-making body of the Employees’ Provident Fund Organisation (EPFO) at a meeting in New Delhi on Wednesday.

Four fund managers—ICICI Prudential Asset Management Co. Ltd, HSBC Asset Management (India) Pvt. Ltd, Reliance Capital Asset Management Ltd and SBI—have been managing the pension fund for the past two-and-half-years, and their contract with the labour ministry-controlled EPFO was to end on 31 March.

“SBI will manage the fund during the interim period,” labour minister Mallikarjun Kharge said after the meeting. “The CBT has unanimously decided not to extend the tenure of the other fund managers.”

The pension fund’s trustees, in a special meeting held in July 2008, had approved selection of the four fund managers, according to the agenda note prepared by the labour ministry and reviewed by Mint. Initially, the term of contract was for two years that could be extended by a year on mutual consent of EPFO and the portfolio managers. The two-year tenure of the existing fund managers had ended in September and was extended for six months till March-end.

“Since the whole mandate was getting over on 31 March and the new tender is already under process, much should not be read into this decision,” said Sundeep Sikka, chief executive of Reliance Capital Asset Management. “We have been working on the mandate for three years and if we get an opportunity, would like to continue doing so.”

An HSBC spokesperson declined comment, saying the company hasn’t received an official communication about the decision by the pension fund.

“We are in the process of selecting new fund managers within the next three months” (by the end of June), said Kharge, who is also the head of CBT, which comprises representatives from the government, employees and employers.

At least 11 asset management companies, including the above four, had applied to manage the EPF money beginning 1 April. Companies such as Kotak Securities Ltd and UTI Securities Ltd are among others that have shown interest in managing the pension fund. EPFO has forwarded the tender document to the Central Vigilance Commission (CVC), the Central government’s anti-corruption watchdog, for clearance. This is the first time EPFO has sought the CVC’s view in the appointment of fund managers.

“It is better to guard against any eventuality,” Central Provident Fund commissioner Samirendra Chatterjee said. “We have sought clearance from the CVC and (are) awaiting their response.”

A senior official of another asset management company, which has evinced interest in managing the fund, said the move to give an extension to SBI and not to the other three private players is not surprising. “A government agency is bound to prefer another government entity till CVC completes the verification,” the officer said.

Though neither Kharge nor Chatterjee gave any explanation on why EPFO did not continue with all the existing fund managers till the fresh appointments of fund managers are through, labour ministry officials said in the time of scams it is is better to be cautious. “SBI is a government undertaking and there is less chance of any problem. Let the CVC clear all the bidders first. As such, the EPFO is not breaching any contract with Reliance Capital, ICICI Prudential or HSBC as their contract is getting over on 31 March,” said a senior labour ministry official, who declined to be named.

The official said that at a time when the country is facing several scams, there is nothing wrong entrusting the fund with SBI, which has a good track record, during the interim period.

EPF has a total corpus of at least Rs. 3.3 trillion, and nearly Rs. 40,000 crore is added to its corpus every year.

The retirement fund is largely invested in government bonds. EPFO has as many as 47 million accounts.

ICICI Prudential officials were not available for comment, and Mint could not immediately reach SBI for a comment on the development.

prashant.n@livemint.com

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Declaration of rate of interest on EPF interest for the year 2010-11.

No.R-11018/1/2010.SS-II 

Government of India 

Ministry of Labour & Employment

************

Shram Shakti Bhawan, Rafi Marg, 

New Delhi, dated the 17th March, 2011.

To

The Central Provident Fund Commissioner,
Employees Provident Fund Organisation,
Bhavishya Nidhi Bhawan,
Bhikaiji Cama Place,
New Delhi

Subject:- Declaration of rate of interest on EPF interest for the year 2010-11.

Sir,

The undersigned is directed to refer to CPFC’s U0 Note No.Invst.l/3(2)/133/1011/ROI/205 dated 13-10-2010 on the subject mentioned above and to convey the approval of the Central Government under para 60(1) of the Employees’ Provident Funds Scheme, 1952 to crediting of interest @ 9.5% for the year 2010-11 to the account of each member of the Scheme on the condition that the 4.72 crore Member accounts should be updated within a period of six months and if any shortfall in Interest Suspense Account is noticed, then the same should be adjusted in the interest rate to be fixed for the next year (2011-12).

2. You are, therefore, requested to take necessary action accordingly under intimation to the Ministry.

Yours faithfully, 

(S.D. Xavier) 

Under Secretary to Govt. of India

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Govt approves 9.5% interest on PF deposits for 2010-11

The finance ministry on Thursday approved higher interest rate of 9.5 per cent to over 4.7 crore depositors with the Employees Provident Fund Organisation (EPFO) for 2010-11.

The EPFO had been paying 8.5 per cent interest on PF deposits since 2005-06.

In September last year, it had recommended an increase in interest rate to 9.5 per cent for 2010-11 after discovering Rs 1,731 crore surplus in their books of accounts.

"The finance ministry has ratified 9.5 per cent rate of return on PF deposits for 2010-11. We have received a notification in this regard," Central Provident Fund Commissioner Samirendra Chatterjee told the news agency.

Chatterjee further added that "our calculations regarding Rs 1,731 crore surplus in the interest suspense account were found correct by the finance ministry and so they approved this higher rate of return".

The finance ministry’s approval is subject to the condition that any shortfall on account of payment of 9.5 per cent rate of return would be met by making adjustments in the interest rate in 2011-12.

Chatterjee, however, said that there would be no need for making any adjustment in the next fiscal as "EPFO calculations are correct regarding the discovery of a surplus of Rs 1,731 crore in the interest suspense account."

The finance ministry has also asked the EPFO to update its subscriber accounts within the next six months.

EPFO’s apex decision making body-the Central Board of Trustees (CBT)- in September last year had decided to provide 9.5 rate of return on retirement savings in 2010-11 after it found a surplus of Rs 1,731 crore.

Refusing to ratify the said rate of return, the finance ministry had earlier argued that the surplus shown by the ministry was not real after CAG report has called the EPFOs so called surplus unverifiable.

According to sources, the finance ministry approved 9.5 per cent interest after the intervention by Finance Minister Pranab Mukherjee.

SOURCE -DDNEWS

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Enhancement of Pension Under EPS, 1995

The Central Government constituted an Expert Committee for review of the Employees’ Pension Scheme, 1995. The Expert Committee considered the various demands of pensioners including enhancement of pension under the Employees’ Pension Scheme, 1995. The Expert Committee has submitted its report to the Central Government on 05.08.2010 and recommendations are presently under examination/consideration of the Central Board of Trustees of the Employees Provident Fund Organization.

This information was given by Shri Mallikarjun Kharge, Minister for Labour And Employment in a written reply to a question in the Rajya Sabha today. 

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EPFO decided 9.5 pc interest on PF and not to invest in stock markets

EPFO for 9.5 pc interest on PF; not to invest in bourses 

The EPFO on Tuesday stuck to its decision that about 4.71 crore subscribers of the pension fund should get one per cent increase in interest on their deposits for 2010-11, pegging the rate of interest at 9.5 per cent. 

The Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) also decided not to invest in stock markets. 

After a two-hour meeting of the CBT, Labour and Employment Minister Mallikarjun Kharge expressed hope the finance ministry will shortly give its concurrence to the proposal. 

"I hope that after we answered all clarifications, they (Finance Ministry) will approve it (9.5 per cent interest rate for 2010-11)," he told reporters on the finance ministry's reservation on 9.5 per cent recommended by the Central Board of Trustees of Employees Provident Fund Organisation (EPFO) in September last. 

"As far as 9.5 per cent interest (2010-11) is concerned, the Finance Ministry had sought some clarifications. Those clarifications have been sent by Labour Secretary to the Finance Ministry," Kharge added. 

Downplaying the ongoing tussle between the two ministries over hiking the interest rates on PF deposits, Kharge said there was "no tussle between the two ministries over giving 9.5 per cent interest rate." 

"These are just consultations between the two ministries. They had certain queries and when we satisfy them. They will definitely approve it," Labour Secretary P C Chaturvedi later explained. 

Although CBT, which is headed by labour minister, had decided to give a higher return of 9.5 per cent on provident fund deposits for 2010-11, the Finance Ministry had expressed its opposition to the move. 

Following discovery of Rs 1,731.57 crore in suspense account, the EPFO trustees favoured raising the rate of interest on provident fund deposits to 9.5 per cent for its 4.71 crore subscribers from 8.5 per cent which is being paid by EPFO since 2005-06. 

The decision, however, did not find favour with the Finance Ministry which argued that there was no real surplus. 

It said the surplus shown by the EPFO arose because all subscribers' accounts were not updated. 

In a recent letter of 29th January, the Labour Ministry argued the EPFO is not asking for any government support for the extra returns to the salaried workers. 

It is their money which has earned returns. 

The Finance Ministry's objections were based on a report by Comptroller and Auditor General which suggested that there was no surplus with the EFFO's interest suspense account. 

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Get info on PF claim settlement online, mobile phones

Over 4.72 crore subscribers of EPFO will soon be able to track status of their claim settlement and account transfer online and also get updates on their mobile phones.

This will be possible as the entire data of the retirement fund manager EPFO will be digitalised by March-end.

"We have already completed the digitalisation of data at our 113 offices and the work in the remaining seven offices would be completed by the end of next month," Central Provident Fund Commissioner Samirendra Chatterjee told PTI.

"Once the digitalisation process is completed, the account transfer and money withdrawal claims' status could be done and tracked online by Employees' Provident Fund Organisation (EPFO) subscribers on the mobile phone," he said.

Besides, the subscribers would be intimated via short mobile messages (SMS) about the status of their request for account transfer and claim settlement.

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