After the decision to reduce the Employee Provident Fund interest rate to 8.25% in 2011-12 from 9.5% in 2010-11 by the Employees' Provident Fund Organization did not go down very well with many, the government has announced that the interest rate will be hike to 8.6% for FY13, reports said.
According to reports, the interest rates were brought down last year on the recommendation of the finance ministry.
"The rates were brought down due to lower income (on investment in Special Deposit Schemes).There is no question of minimum or maximum interest rates. We distribute it as per our revenue. Next time, it will be 8.6%," labour minister Mallikarju Kharge said in the Rajya Sabha.
The retirement fund organisation has parked over Rs. 550bn in the Special Deposit Schemes (SDS) aimed at providing better returns to non-government provident funds and other such funds. The SDS was started in 1975 to ensure better returns for non-government provident fund, superannuation and gratuity funds.
Kharge said the rate of interest on funds depend on the revenues. Since the money belongs to workers, the government does not intend to reap any benefit out of the fund and returns every penny for the welfare of the subscribers.
"Even if the interest rate is less, the money is kept in safe custody," reports said quoting Kharge.