The Employees' Provident Fund Organisation (EPFO) on Wednesday declared a cut of 0.1 per cent in interest rates for the financial year 2017-18. The subscribers to the retirement fund will get 8.55 per cent interest on their savings for the current financial year. It is lower than 8.65 per cent interest rate declared for the financial year 8.65 per cent.
EPFO had cut the interest rate in the last financial year from 8.8 per cent in 2015-16 to 8.65 per cent in 2016-17. However, it was expected to maintain the rate this year.
"It has earned a return of Rs 1,054 crore on sale of ETFs this month, which would be sufficient to provide 8.65 per cent rate of interest this fiscal," Sources had told PTI.
The EPFO has been investing in ETFs since August 2015 and it has so far not monetised the ETF investments. The EPFO has invested around Rs 44,000 crore in the ETFs till date.
According to the latest evaluation of the EPFO's investments in ETFs, it has earned a return of 16 per cent. However, this return is notional because it could not be realised unless the EPFO liquidates these ETF investments.
Besides, the sources had added, the trustees may also review the proposal to credit the ETFs into the members' EPF account because a large number of members do not have that level of financial literacy.
(With inputs from PTI)