The EPFO has announced that they’re going to live up to their word and deliver on their Provident Fund interest percentage for the Fiscal year 2019-2020 which is set to be 8.5 percent.
Now, it’s lower than the last year’s 8.65 percent. But given the pandemic situation and the delay in getting the release of the interest due to problems raised by the tight situation. It makes the receiver happy as there are no cuts in the final payout.
For those who are not aware of the concept of Provident fund. Then it can be simply understood as a fund where a small percentage of your earning from both you and your employer’s side is stored in a manner of fixed deposit. With a comparatively higher rate of interest which is a variable number and is fixed at the starting of every year by EPFO after seeing the market conditions.
The current situation has broken down the market and we’ve all seen the recent GDP cash of almost 24 percent. After which it was hard to believe that EPFO would be paying back the interest on provident funds in full amount but they did that anyhow.
But a new situation has risen up and it’s rumored that the payment would be made in trenches and not in the usual manner of a one-time payment.
The majority fund claim of 8.16 percent would be credited till the end of September and the rest .35 will be added before 31st December courtesy of the pandemic
This will not affect the next year’s interest percentage as the starting amount at which the next years’ interest percentage would be calculated would include the .35 percentage anyways. This money is for the EPFO to get some stability back with the extra money that they had at hand without harming the provident fund holders.
“Now, the official release states that the 0.35 percent payout will be made subject to redemption of equity investments. So, confusion has arisen over whether the 8.15 percent will be credited now, with the balance being credited in December or will the credit be effected in December or is it possible that the ETF units not be redeemed this year if stock markets underperform and no capital gains are made,” says an industry source, speaking on the condition of anonymity.
The bigger issue for the provident fund holders currently is the prediction that next year’s percentage would be definitely way lower in comparison due to the market crash and pandemic.
But even if they’re to switch to somewhere else, they should keep in mind that the provident fund’s interest is way higher in comparison to any other fixed deposit schemes. And that they should be making an informed decision rather than a hasty one.