Provident Fund deposits will now earn more, with the Employees’ Provident Fund Organisation (EPFO) recommending a hike in interest rates to 8.65% for 2018-19. About six crore employees and pensioners who subscribe to the scheme will benefit.
At its 224th meeting on Thursday chaired by Labour Minister Santosh Gangwar, the EPFO’s Central Board of Trustees decided to recommend a rate hike of 10 basis points, according to an official statement.
The recommendation will go to the Finance Ministry for the final approval. The increased payout is expected to leave EPFO with a surplus of ₹151 crore for the year, in comparison to a surplus of ₹586 crore the previous year.
The 8.65% rate is higher than what is available on government small savings schemes. This hike returns the rate of interest to the same level as it was in 2016-17, after a decline to a five-year low of 8.55% in 2017-18.
ESIC cuts contribution
In another decision that is likely to benefit workers in the election year, the Employees State Insurance Corporation’s Central Board reduced contribution rates from 6.5% to 5% of monthly wages at its Tuesday meeting. Employees will only have to pay 1%, while the employer’s share is reduced to 4%.
ESIC also decided to fully reimburse state governments for its medical scheme, removing the cap of ₹3,000 per person. The monthly income ceiling limit for dependent parents to avail benefits under the scheme was also raised from ₹5,000 to ₹9000.