The board of the Employees’ Provident Fund Organisation (EPFO) will meet on March 27 and 28 to discuss the higher salary-linked pension, FY23 interest rates and annual financial estimates.
The 233rd meeting of the Central Board of Trustees (CBT), to be chaired by Union labour and employment minister Bhupender Yadav, was scheduled for March 25-26 but was pushed back. A communication attributed the delay to “administrative exigencies”, The Hindu reported.
The CBT decisions will affect around six crore active EPFO subscribers. Of these, 72.73 lakh were pensioners in FY22. Here’s a look at what will likely be discussed at the much-watched meeting:
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Interest rate: The EPF interest rate for FY23 is likely to be around 8 percent. The CBT recommended 8.1 percent for FY22 in March 2022, which was ratified by the finance ministry in the June of that year. This left the EPFO with an estimated Rs 450 crore surplus, which means rates are likely to stay within the same range.
In 2022, many subscribers experience a delay in interest credit. It was also the first year that the Union Budget proposed taxing of interest on higher contributions to EPF. The 8.1 percent rate offered was the lowest by EPFO since the 1980s.
The Interest rate for FY20 and FY21 was 8.5 percent — then the lowest. In FY19 it was 8.65 percent, FY18 8.55 percent and in FY17 it was 8.65 percent.
Higher pension: The CBT is expected to have detailed talks regarding the higher pension option for subscribers after the Supreme Court order. The EPFO allowed employees to opt for higher pension linked to salaries till May 3. The option was seen as a resolution of two issues — a progressive increase in the number of pensioners and the gap between the net present value (NPV) of contribution and benefits, an Indian Express report said.
Also Read | EPF rate to remain at around 8%
Ceiling wage: The ceiling wage is likely to be raised from Rs 15,000 a month to Rs 21,000, as report in Business Standard said. This would be the latest revision after this ceiling was last raised from Rs 6,000 a month to Rs 15,000 in 2014 for companies with more than 20 employees.
Minimum pension: The CBT may also look at increasing the minimum pension to Rs 3,000 a month from Rs 1,000, Zee News reported. This will be in-line with recommendations by the parliamentary standing committee on labour. Trade Unions are demanding an increase to Rs 6,000 a month. The Rs 1,000 a month floor was introduced in 2014.
Tweaks to benefits: The CBT could also discuss steps to bolster the EPFO’s coverage for workers and its corpus levels; extension of the pension scheme beyond 35 years of service and withdrawal benefits for those who have contributed for less than six months.
Investment: Discussions are also expected on allowing increased investment of incremental deposits in equity instruments regardless of age or risk profile of members. Instruments under consideration include infrastructure investment trusts (InvITs) and alternative investment funds (AIFs).
This will be a bold move as at present the organisation invests 45-50 percent in government securities, 35-45 percent in debt, 5-15 percent in short-term debt and 5 percent in asset-backed or other instruments.