EPFO trustees to meet today to fix FY20 interest rate, 8.5% likely

The Central Board of Trustees (CBT) — apex decision-making body of the Employees’ Provident Fund Organisation (EPFO), is set to meet on March 5. The body is expected to decide on the quantum of an interest rate cut on provident fund (PF) deposits.

The organisation is reportedly looking to make up for low investment yields and may cut rates by 15 basis points to 8.5 percent in FY20 (100 bps=1 percentage point). The interest rate was 8.65 percent in FY19.

“Earnings from long term fixed deposits (FDs), bonds and government securities (G-Secs) fell 50-80 bps over the past year and the retirement fund body may thus “find it difficult to keep rates unchanged this fiscal,” sources told the Economic Times.

The quantum of cut may however also be lower with sources hinting that the government would be cautious about upsetting employee sentiment.