EPFO may credit 8.5% interest for FY20 in two instalments

The Employees’ Provident Fund Organisation on Wednesday recommended crediting the 8.5% interest rate to formal sector workers for FY20 in two instalments. It would comprise of 8.15% from debt income, which will be credited now and the remaining 0.35% will be credited in December subject to redemption of the EPFO’s equity investments.

The EPFO is staring at a shortfall of ₹2,500 crore in FY20 if it gives out the interest rate of 8.5% to its subscribers at one go. The interest rate of 8.5% was already a seven-year low. If the EPFO is unable to credit the remaining 0.35% of interest rate in December this year, it will be the lowest returns that the fund's subscribers will get since 1977-78.

The EPFO’s investments in the equity markets are yielded negative returns in 2019-20.