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<ul><li>Spooked by rising debt defaults, the Employee Provident Fund Organisation has decided to play it safe. </li><li>Not just to private companies, the pension fund has decided to turn cautious even while buying bonds of government companies. </li><li>EPFO also decided to exercise its early redemption options and cut down exposure to the debt-ridden DHFL. </li><li>The recent crisis in non-banking financial companies, sparked by the collapse of IL&amp;FS, has led to an acute credit crunch in the Indian economy. </li></ul> The credit crunch in the Indian economy is getting more acute by every passing day. The latest to join the list of risk-averse financial institutions, spooked by the spike in unpaid loans, is the country’s pension fund. The Employees Provident Fund Organisation (EPFO) which is managed by the ministry of labour and employment, today made a landmark decision to stay away from lending to private sector companies. It has decided to turn cautious while lending to state-owned companies as well. “The Central Board of Trustees (CBT) approved the decision to withhold any further investment in Private Sector Companies Bonds and to compulsorily consider one of the two required ratings necessarily from CRISIL, CARE, ICRA and India Ratings for investments in public sector undertakings’ bonds category,” said a press release on the discussions held today. This will be a heavy blow to the company as<a href="https://www.business-standard.com/article/companies/nbfc-crisis-epfo-decides-to-halt-investment-in-private-sector-bonds-119062001418_1.html"> it invests as</a> much as 20-45% of its incremental funds in debt instruments. And the assets of the organization that manages the pensions of hundreds of millions of Indians is at massive ₹8 lakh crore. This is another big setback for the market sentiment which is already saddled by a slew of bad news about the economy. Sensex tumbled by 581 points today (August 22). Twice bitten This decision probably came after its exposure to the non-banking financial companies like IL&amp;FS which defaulted on payments. Though it officially never declared how much it is owed to by the scam-ridden IL&amp;FS,<a href="https://economictimes.indiatimes.com/markets/stocks/news/epfo-writes-to-finance-ministry-on-exposure-in-ilfs-bonds/articleshow/68135800.cms?from=mdr"> </a>the exposure is estimated at ₹570 crore, <a href="https://economictimes.indiatimes.com/markets/stocks/news/epfo-writes-to-finance-ministry-on-exposure-in-ilfs-bonds/articleshow/68135800.cms?from=mdr">as per reports citing sources</a>. While the direct exposure to infrastructure lending giant would be just 0.1% of EPFO’s total investments, the decision to abstain from making fresh loans to corporates may be triggered by the wave of defaults triggered by the collapse of IL&amp;FS. EPFO has exposure to yet another shadow bank DHFL, which is one of the many companies that crumbled under the IL&amp;FS debacle. In today’s meeting, the pension fund decided to exercise its early redemption options to cut down exposure to the housing finance company which is saddling heavy debt. In 2015, the government had announced that the pension fund would invest more and make the most of the ‘world’s fastest growing economy’ tag. The Finance Minister Arun Jaitley had then said <a href="https://economictimes.indiatimes.com/news/economy/policy/labour-ministry-to-notify-pattern-of-epfo-investment-in-equity-soon/articleshow/46761238.cms?from=mdr">in the Budget </a>that EPFO would invest 5% of its funds into equity and equity related schemes. However, as things turned for the worse in the last three years, EPFO joined the list of lenders and investors who prefer keeping cash safe in the banks instead of lending to risky companies. The resulting credit crunch further hamstrung an already sluggish economy.

Indian pension fund says it won’t lend money to private companies

The labour ministry has implemented retirement fund body <keyword id="6372438" type="ORGANIZATION" weightage="20" keywordseo="epfo">EPFO</keyword>'s <keyword id="68581" type="PERSON" weightage="20" keywordseo="Decision">decision</keyword> to restore pension commutation under the Employees' Pension Scheme, a move that will benefit 6.3 lakh pensioners. Pension commutation refers to part-withdrawal of fund in advance by a subscriber, who then gets reduced pension amount for 15 years. With the ministry's latest decision, such pensioners would receive their full pension after completion of 15 years. On February 20, the ministry notified the decision of the <keyword id="351142" type="COMPANY" weightage="20" keywordseo="Employees-Provident-Fund-Organisation">Employees' Provident Fund Organisation</keyword> (EPFO) to restore pension of those who opted for commutation of their pension on or before September 25, 2008. In this regard, the Employees' Pension Scheme -- run by the EPFO -- has been amended. "The normal pension in respect of those members who availed the benefit of commutation of pension under the erstwhile paragraph 12A of this scheme, on or before the 25th day of September, 2008, shall be restored after completion of fifteen years from the date of such commutation," as per the notification. As many as 6.3 lakh pensioners would benefit from the decision. They had opted for commutation of their pension and got a lump sum at the time of retirement from their pension fund on or before September 25, 2008. The provision for pension commutation of pension was withdrawn by the EPFO. Now, the facility has been restored for all those who opted for it on or before September 25, 2008. Under the commutation, monthly pension used to be cut by one-third for the next 15 years and the reduced amount was given in lump sum. After 15 years, pensioners were entitled to get the full pension. In August 2019, the EPFO's apex decision-making body -- <keyword id="5190387" type="COMPANY" weightage="20" keywordseo="Central-Board-of">Central Board of</keyword> Trustees headed by the labour minister -- approved the proposal to restore commutation of pension for 6.3 lakh pensioners who had opted for the benefit. An EPFO panel had recommended for amendment in EPS-95 (Employees' Pension Scheme 1995) for restoration of commuted value of pension to pensioners after 15 years of drawing commutation. Earlier, under EPS-95, members were allowed to commute one-third of their pension for 10 years, which was restored after 15 years. This facility is still available to certain categories of government employees.

6.3 lakh pensioners in India can now withdraw their funds in advance

Facing sharp criticism over bringing employee provident fund withdrawals under tax net, Finance Minister <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> is mulling over a partial rollback. 
 
Jaitley said he will announce the final decision on the matter during Budget debate in the Parliament. 
 
While announcing the Budget 2016-17, Jaitley proposed taxing 60 per cent of the withdrawal from Employee Provident Fund (EPF) on contributions to be made after April 1. 
 
The decision attracted criticism and many petitions against the same. 
 
In his clarification, Jaitley said the move was aimed at high-salaried class and not the overwhelming section of 3.7 crore EPF members. 
 
"The revenue department had considered various aspects of the National Pension Scheme and Employee Provident Fund Organisation (EPFO). Their intention is not revenue raising, that was not the principal intention," he said. 
 
With the proposal being attacked by various employees unions including RSS-backed BMS and political parties who termed it as "an attack on the working class and a clear case of double taxation," the government yesterday said it was to limit the tax only to the interest accrued. 
"Now there has been some reactions. When the debate comes up in Parliament I will give the government's response as to what decision we finally take in this matter," he said. 
 
Jaitley said the objective behind the proposal was that no tax is levied on 40 per cent of the withdrawal which can be used for meeting retirement commitments. 
 
(Image: Indiatimes)

Govt
rethinking its decision to tax interest on EPF

<ul><li>The Union government is likely to double or even triple the minimum monthly <keyword id="6354432" type="UNKNOWN" weightage="20" keywordseo="Pension">pension</keyword> of retired organised sector employees. </li><li>The recommendation for the same was made by a three-member committee constituted by the labour ministry. </li><li>The central board of EPFO, and the committee are expected to deliberate upon the way to go about the committee’s recommendation on Monday and Tuesday.</li></ul>Pensioners now have one more thing to be happy about besides not having to work through this terrible summer. The Union government is <a href="https://www.livemint.com/Politics/gQ2c7DqE4FL6hiJtE4wCBK/Govt-to-double-minimum-pension-for-organized-sector-employee.html">likely </a>to double or even triple the minimum monthly pension of retired organised sector employees. The recommendation for the same was made by a three-member committee constituted by the labour ministry, three months ago. As per the committee, the existing minimum pension of ₹1,000 per month should be immediately raised to ₹2,000 and further deliberations should be made on the possibility of increasing it upto ₹5,000. A ₹1,000 pension per month means as little as ₹33 per day which, considering the high cost of living, is insufficient even for a rural pensioner. The Union Cabinet had approved ₹1,000 as the minimum pension in 2014 and had later extended it upto 2015. From then onwards, it has never been revised. The issues of pension are undertaken by Employees' Provident Fund Organisation (EPFO) that is the institution that manages social security funds of workers in the (semi) organised sector in <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword>. All establishments across the country that are ‘organised’ or have 20 or more employees whose basic wages are up to ₹15,000 are covered under the social security schemes run by this institution. Each month, an organised sector employee contributes 12% of his basic salary to EPFO as provident deduction, and the same amount is contributed by the employer. From the employer’s contribution,<a href="https://economictimes.indiatimes.com/news/economy/policy/epfo-nod-likely-soon-for-minimum-rs-2k-eps-pension/articleshow/64724411.cms"> 8.33%</a> goes to employees’ pension scheme and the rest to the provident fund. The central board of EPFO and the committee are expected to deliberate on the way to go about with the committee’s recommendation over Monday and Tuesday. Though the decision is not final yet, the committee is strongly in favour of it. Ravi Wig, who is also a central board member of the EPFO, is hopeful that the labour ministry will stand in their favour since the previous additional secretary heading the committee has been promoted as the position of a secretary in the labour and employment ministry. Of the six million pensioners that fall under the <a href="https://epfindia.gov.in/site_docs/PDFs/Downloads_PDFs/EPS95_update102008.pdf">Employee’s Pension Scheme (1995)</a>, about four million get less than ₹1,500 per month while the government boasts of three trillion in its pension funds. Considering these figures, if the minimum pension is even doubled, it would help lakhs of pensioners, but it will also add <a href="https://www.businesstoday.in/current/economy-politics/minimum-pension-under-employees-pension-scheme-likely-to-be-doubled/story/279522.html">₹30 billion </a>to the government budget, annually.

Perks of the trade: India may double or triple minimum monthly pension

Real-estate company <keyword id="6361138" type="CITY" weightage="20" keywordseo="Unitech">Unitech</keyword> is under the scanner as some of the employees have claimed that the company did not paid their remuneration on time. Not just this, but the employees also cite that they are facing delays in depositing deducted tax and provident funds. 
 
If reports are to be believed, the real-estate firm has defaulted over its repayments to individuals who had subscribed to its fixed deposit scheme. The allegations have emerged as a result of a delay in the delivery of projects. 
 
"The projects are massively delayed, employees are not getting paid on time and worst of all is the company's attitude. The salary has been delayed as much as six months in some cases. I was paid the September 2014 salary in April 2015," a Unitech employee informed ET, on condition of anonymity. 
 <keyword id="6418194" type="PERSON" weightage="20" keywordseo="Ajay-Chandra">Ajay Chandra</keyword>, MD Unitech, in a defensive mode had said, "In most SPVs (<keyword id="732527" type="ORGANIZATION" weightage="20" keywordseo="Special-Purpose-Vehicles">special purpose vehicles</keyword>), we have paid salaries on time in the last six months." Chandar also said that in such cases, the firm has addressed the issue very seriously. 
 
While talking on the reason of the delay, he said, were cash flow issues. "Wage bill and overall expense was much more than we could service at a point of time when we had 12,000-15,000 people working," he said. 
 The employees cited earlier further told ET that things have turned much worse than the company cared to admit. They said the <keyword id="393468" type="ORGANIZATION" weightage="20" keywordseo="Employee-Provident-Fund-Organisation">Employee Provident Fund Organisation</keyword> (<keyword id="6372438" type="ORGANIZATION" weightage="20" keywordseo="EPFO">EPFO</keyword>) had also lodged an FIR against the developer for not depositing PF despite deducting it from salaries of employees. However, any copy of FIR didn’t come up and ET could not ascertain this with EPFO separately. 
 
Recruits who left the struggling firm in December 2014 said they foresaw these issues 12 months before they decided to quit. "We are not able to pay I-T returns and people who proceeded on their own got notices from the I-T department. People who left three years ago are yet to get full and final settlement," said a former employee.

This real-estate firm has not paid its employees in the last six months

<ul><li>The Central Board of Employees' <keyword id="45028" type="General" weightage="20" keywordseo="provident-fund" source="Orion">Provident Fund</keyword> Organisation (<keyword id="6372438" type="General" weightage="80" keywordseo="epfo" source="Orion">EPFO</keyword>) has recommended an 8.15% interest rate to be credited on provident funds for the financial year 2022-23.</li><li>In March 2022, the government declared an 8.1% interest rate for more than its six crore members, which was the lowest since 1977-78.</li><li>The recommendation involves the distribution of more than ₹90,000 crore in the members' account on the total principal amount of about ₹11 lakh crore.</li></ul>The Central Board of Employees' Provident Fund Organisation (EPFO) has recommended an 8.15 per cent interest rate to be credited on provident funds for the financial year 2022-23. In March 2022, the government declared an 8.1 per cent interest rate for more than its six crore members, which was the lowest since 1977-78. The recommended interest rate for 2022-23 would be officially notified in the government gazette after approval of the Ministry of Finance, following which EPFO would credit the rate of interest into its subscribers' accounts. The recommendation involves the distribution of more than Rs 90,000 crore in the members' account on the total principal amount of about Rs 11 lakh crore. In 2021-22, the payment outgo and principal amounts were Rs 77,425 crore and Rs 9.56 lakh crore, respectively. "The total income recommended for being distributed is the highest to date. The growth in income and the principal amount is respectively more than 16 per cent and 15 per cent as compared to the last financial year 2021-22," the Ministry of Labour and Employment said in a release on Tuesday. EPFO is a social security organization responsible for providing social security benefits in the form of Provident, Pension and Insurance Funds to the organized workforce of the country. Separately, the provisional payroll data showed a total of 14.86 lakh net members were added in the month of January 2023. Out of the total members added during the month, around 7.77 lakh new members have come under the ambit of EPFO for the first time. Among the newly joined members, the highest enrolment is registered in the age group of 18-21 years with 2.26 lakh members, followed by the age group of 22-25 years with 2.06 lakh members. The age groups of 18-25 years constitute 55.52 per cent of the total of new members during the month of January. For the month of January 2023, it said 3.54 lakh members have exited the fold of EPFO. This is the lowest exit in the last four months. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/top-chatgpt-4-plugins-from-math-physics-and-language-tutor-to-vacation-planner/articleshow/99036667.cms">Top ChatGPT 4 plugins: From math, physics and language tutor to vacation planner</a> <a href="https://www.businessinsider.in/finance/banks/news/rbis-mpc-could-pause-rate-hikes-in-april-to-gauge-the-impact-of-hikes-so-far-sbi-research/articleshow/99030220.cms">RBI’s MPC could pause rate hikes in April to gauge the impact of hikes so far: SBI Research</a> <a href="https://www.businessinsider.in/business/corporates/news/layoffs-coming-to-the-indian-it-sector-analysts-say-accentures-jobs-cuts-offers-a-blueprint/articleshow/98970175.cms">Layoffs coming to the Indian IT sector? Analysts say Accenture’s jobs cuts offers a ‘blueprint’</a>

Employees' provident fund interest rate fixed at 8.15% for 2022-23

<ul><li>Employees can now withdraw 75% of the <keyword id="114854" type="ORGANIZATION" weightage="20" keywordseo="Employee-Provident-Fund">Employee Provident Fund</keyword> (<keyword id="45027" type="ORGANIZATION" weightage="20" keywordseo="EPF">EPF</keyword>) if they’ve been unemployed for a month. </li><li>This also means that the EPF account won’t be shut. </li><li>The continuity of the EPF account is crucial for pension and taxation on withdrawals.</li></ul>There have been a number of changes made to the Employee Provident Fund (EPF) over the past couple of years, so many that it is sometimes hard to keep track of. Most recently, however, the big change has been that subscribers can <a href="https://www.newsx.com/business/epfo-allows-members-to-withdraw-funds-for-marriage-house-purchase">withdraw 75% of their EPF balance</a> provided that they’ve been unemployed for at least a month. And, you won’t have to close your account. This is important because according to earlier rules if someone’s been unemployed for more than two months, they could withdraw their entire balance. But, that also meant that they would have to discontinue their account. The account lives on The EPF is the <a href="https://www.bankbazaar.com/tax/all-about-epf.html">culmination</a> of your contribution, your employer’s contribution and interest accrued on that principal amount. So, this measure lets you liquidate your investment like an advance against the principal. Liquidity may be the short-run gain, but in the long-run, the survival of the EPF account is much more significant. As per the rules of the Employee Provident Fund Organisation (EPFO), in order for a subscriber to be <a href="https://www.businesstoday.in/current/economy-politics/epfo-pf-withdrawal-procedure-employer-employee-salary/story/279312.html">eligible</a> for pension, they have to maintain their EPF account for at least 10 years. In case the account shuts down before the stated time period, the process will have to be started all over again with a new account. So since your account won’t be discontinued if you’re withdrawing 75% of your EPF, it will remain eligible for pension. That being said, the continuity of your account is also important for <a href="https://www.bankbazaar.com/saving-schemes/pf-withdrawal-rules.html?ck=Y%2BziX71XnZjIM9ZwEflsyDYlRL7gaN4W0xhuJSr9Iq7aMYwRm2IPACTQB2XBBtGG&amp;rc=1">taxation</a> purposes. Any withdrawals that are made from the EPF account before five years are taxable. But should your account stay intact, the withdrawals are completely <keyword id="880043" type="PERSON" weightage="20" keywordseo="Tax-free">tax-free</keyword> after the first five years. The withdrawal you make if you’ve been unemployed for a month is tax-free in either situation, but the interruption would affect withdrawals for marriage, education, home loans etc. And, it’s not just the interest that’s taxed. It’s the principal amount as well. Overall, the EPFO has taken progressive steps towards evolving the fund for today’s market even though the latest interest of 8.55% is the <a href="https://www.financialexpress.com/money/epfo-alert-modi-government-to-notify-8-55-interest-on-provident-fund-this-week-check-details-here/1157155/">lowest</a> it has witnessed in 5 years. They’ve introduced equity traded funds (ETFs) instead of being limited to fixed income instruments. Reports say that the EPFO may even have plans of letting subscribers <a href="https://economictimes.indiatimes.com/wealth/personal-finance-news/epfo-members-to-get-option-to-hike-investments-in-etfs-by-this-fiscal/articleshow/63815546.cms">choose</a> the amount of money they would want to be put into equity instead of the blanket 15% implemented right now.

Here's why the new EPF rules make good sense in the long-run

Retirement fund body <keyword id="6372438" type="General" weightage="100" keywordseo="epfo" source="Orion">EPFO</keyword> is likely to approve this month a proposal to enhance its investments in equites to up to 20 per cent of the investible deposits from the current limit of 15 per cent. The proposal is expected to be considered and approved during the EPFO trustees' meeting scheduled to be held on July 29 and 30, according to a source. At present, EPFO can investment 5 to 15 per cent of the investible deposits in equity or equity-related schemes. The proposal to revise the limit to 20 per cent has been vetted and approved by the Employees' Provident Fund Organisation's (EPFO) advisory body Finance Audit and Investment Committee (FAIC). The recommendation of FAIC will be placed before the EPFO apex decision making body -- <keyword id="225704" type="General" weightage="50" keywordseo="central-board-of-trustees" source="Orion">Central Board of Trustees</keyword> (<keyword id="207775" type="General" weightage="50" keywordseo="cbt" source="Orion">CBT</keyword>) -- for consideration and approval. "The Central Board of Trustees (CBT) headed by Union Labour Minister is likely to approve the recommendation of the FAIC for increasing the investment in equity and equity related scheme to 5-20 per cent from existing 5-15 per cent," the source said. In a written reply to Lok Sabha on Monday, Minister of State for Labour and Employment Rameshwar Teli said, "FIAC, a sub-committee of CBT, <keyword id="45027" type="General" weightage="50" keywordseo="epf" source="Orion">EPF</keyword>, has recommended for the proposal to increase investment in equity and related investments in category IV of the Pattern of Investment from 5-15 per cent to 5-20 per cent for consideration of CBT, EPF." EPFO had started investing in Exchange Traded Funds (ETFs) in August 2015, putting 5 per cent of its investible deposits in stock-linked products. It was raised to 15 per cent for the current fiscal. Trade unions have been opposing any investment in stock markets by EPFO as these are not backed by government guarantee. In the written reply, Teli also said the notional return on EPFO equity-related investments rose 16.27 per cent in 2021-22 from 14.67 per cent in 2020-21. The reply also showed that the notional rate of return on equity related investment of the the EPFO was in negative at (-) 8.29 per cent in 2019-20 due to the impact of COVID-19. In 2021-22, the minister said EPFO settled 2,88,15,498 claims for withdrawal of Rs 1,04,959.18 crore by the subscribers. EPFO had settled 2,33,90,550 claims for withdrawal of Rs 91,187.54 crore in 2020-21. The withdrawal amount was Rs 70,202.34 crore in 2019-20 under 1,28,77,354 claims settled by the EPFO. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/rbi-seeks-a-crypto-ban-but-it-needs-global-collaboration-says-nirmala-sitharaman/articleshow/92954958.cms">RBI seeks a crypto ban but it needs global collaboration, says Nirmala Sitharaman</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/nifty-50-remains-the-top-performer-in-asia-despite-tussle-between-bulls-and-bears/articleshow/92952677.cms">Nifty 50 remains the top performer in Asia despite tussle between bulls and bears</a>

Retirement fund body EPFO could increase its equity investment limit to 20% from 15% earlier

New Delhi, Retirement fund body EPFO on Thursday started crediting 8.5% rate of interest on employees' <keyword id="45028" type="ORGANIZATION" weightage="20" keywordseo="Provident-Fund">provident fund</keyword> (EPF) for 2019-20 for its over six crore members, a senior official said. A large number of members of the <keyword id="6423266" type="COMPANY" weightage="20" keywordseo="employees-provident-fund-organisation">Employees Provident Fund Organisation</keyword> (EPFO) would be able to see their updated EPF accounts with credit of 8.5 per cent rate of interest for 2019-20, a senior official told . The official further informed that the <keyword id="126926" type="COMPANY" weightage="20" keywordseo="Labour-Ministry">labour ministry</keyword> has already sent the direction to credit the 8.5% interest on EPF for 2019-20 to the EPFO and the body has already started crediting interest into members account for the last fiscal. Labour Minster <keyword id="258830" type="PERSON" weightage="20" keywordseo="Santosh-Gangwar">Santosh Gangwar</keyword> said, "We had said that it would be our endeavour to provide 8.5% rate of interest on EPF for 2019-20. We have issued a notification to provide 8.5% rate of interest on EPF for 2019-20. We have also began the process to credit the said rate of interest into subscribers account." The minister also said that he has asked to ensure that all those members who are retiring on December 31, must get 8.5% rate of interest (for 2019-20). The process for capital gains for payment of 0.35% interest for 2019-20 has also been completed, he added. "It (8.5% interest) would comprise 8.15% from debt income and balance 0.35% (capital gain) from the sale of ETFs (exchange traded funds) subject to their redemption by 31st December, 2020," he said. Earlier in the day, Gangwar had approved the 8.5% rate for last fiscal after receiving the finance ministry's concurrence. Thereafter the direction was sent to the EPFO for crediting the interest on EPF into the subscribers' accounts. In March this year, the EPFO's apex decision making body <keyword id="225704" type="COMPANY" weightage="20" keywordseo="Central-Board-of-Trustees">Central Board of Trustees</keyword> headed by Gangwar had approved 8.5% interest rate on EPF for 2019-20. Earlier in September this year, the EPFO had decided to split 8.5% interest into two installments of 8.15% and 0.35% in its trustees meet headed by Gangwar. But later, the ministry decided to credit the entire 8.5% into subscribers' accounts in one go. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-tata-steel-vedanta-adani-green-tata-motors-maruti-mm-dhfl-v-mart-indian-bank-and-others/articleshow/80038635.cms">Top stocks to watch — Tata Steel, Vedanta, Adani Green, Tata Motors, Maruti, M&amp;M, DHFL, V-Mart, Indian Bank, and others</a> <a href="https://www.businessinsider.in/tech/mobile/news/checkout-the-list-of-upcoming-new-mobiles-in-january-2021-with-expected-price/articleshow/80039794.cms">Upcoming smartphones in India in January 2021</a> <a href="https://www.businessinsider.in/international/news/ten-of-the-most-outrageous-predictions-for-2021-according-to-saxo-bank/slidelist/80040045.cms">From Amazon buying Cyprus to Germany bailing out France — here are ten of the most ‘outrageous’ predictions for 2021</a>

EPFO begins crediting 8.5% interest for six crore people — to reflect in EPF accounts from new year

New Delhi, Mar 4 () Retirement fund body <keyword id="6372438" type="COMPANY" weightage="20" keywordseo="epfo">EPFO</keyword> on Thursday decided to retain 8.5 per cent rate of interest on provident fund deposits for the current financial year. EPFO has more than five crore active subscribers. The Employees' Provident Fund Organisation's (EPFO) apex decision-making body <keyword id="225704" type="COMPANY" weightage="20" keywordseo="Central-Board-of-Trustees">Central Board of Trustees</keyword> decided to fix 8.5 per cent rate of interest for 2020-21 at its meeting in Srinagar on Thursday, sources said. There were speculations that the EPFO would lower interest on provident fund deposits for this fiscal (2020-21) from 8.5 per cent given in 2019-20 in view of more withdrawals and lesser contribution by members amid the coronavirus pandemic. In March last year, the EPFO had lowered interest rate on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent in 2018-19. The <keyword id="45027" type="COMPANY" weightage="20" keywordseo="EPF">EPF</keyword> (<keyword id="114591" type="COMPANY" weightage="20" keywordseo="Employees-Provident-Fund">Employees Provident Fund</keyword>) interest rate provided for 2019-20 was the lowest since 2012-13, when it was 8.5 per cent. The EPFO had provided 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18. The rate of interest was slightly higher at 8.8 per cent in 2015-16. It had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13. The EPFO had provided 8.25 per cent rate of interest on provident fund in 2011-12. KKS RAM

EPFO retains 8.5% interest rate for 2020-21

<ul><li>The Indian government is planning to relax the employee contribution to Employees Provident Fund which will increase <keyword id="8029702" type="UNKNOWN" weightage="20" keywordseo="Take-home-salaries">take home salaries</keyword>. </li><li>As of now, both the employers and the employees each contribute 12% of the salary to the Employee Provident Fund Organisation</li><li>The government aims to lower the mandatory 12% by employees towards <keyword id="45027" type="ORGANIZATION" weightage="20" keywordseo="EPF">EPF</keyword>.</li></ul>The Indian government might be paving the way for higher takehome salaries by reducing the amount that has to be deposited with the Employees Provident Fund, <a href="https://www.business-standard.com/article/economy-policy/take-home-salary-may-rise-under-new-employees-provident-fund-law-119082700033_1.html">reported Business Standard.</a> As per a proposal, the government will decrease the rate of contribution for a specific class of workers<a href="https://economictimes.indiatimes.com/news/economy/policy/domestic-help-others-may-get-pf-benefits/articleshow/70848979.cms"> like domestic help, drivers, maids and other self employed workers. </a>However, the law does not suggest any change in the contribution of the employer's. Currently, all the employees who are earning upto ₹15,000 a month have to pay 24% of their salary. As of now, both the employers and the employees contribute 12% of the salary to the Employee Provident Fund Organisation. The government aims to relax the mandatory 12% contribution by the employee. Along with this, the government also wants to give employees an option to choose between all the schemes provided by the Employees Provident Fund Organisation (<keyword id="6372438" type="ORGANIZATION" weightage="20" keywordseo="epfo">EPFO</keyword>) and the National Pension System (NPS). If approved, an employee who is not satisfied with NPS can make a switch to EPFO. A first draft of the EPF &amp; MP (Amendment) Bill, 2019, has sought comments from stakeholders till September 22.

Take home salaries in India may rise at the cost of employee provident fund

Welcome to the wonderful world of <a href="http://www.businessinsider.in/JACK-BOGLE-An-Elegantly-Simple-Formula-Shows-Why-Passive-Investing-Will-Earn-Higher-Returns-Than-Active-Investing/articleshow/22086333.cms">investments</a>! 
 1. Nominate, Nominate, Nominate: It's presumed that you have an investible surplus either in the form of cash lying idle in the bank account, via salary payments, or you’ve come into money. Either way, the first thing to do is to ensure that you have a nominee in place in your bank account, <keyword id="35450" type="COMPANY" weightage="100" keywordseo="insurance">insurance</keyword> policy, trading-cum-demat account, <keyword id="114854" type="ORGANIZATION" weightage="100" keywordseo="Employee-Provident-Fund">Employee Provident Fund</keyword> account (with your employer) and the Public Provident <a href="http://www.businessinsider.in/Which-One-Is-Better-InvestmentIn-Mutual-Funds-Or-Direct-Investment-Into-Stocks/articleshow/27116001.cms">Fund</a> (with the government). 
 
You may or may not have all of these <a href="http://www.businessinsider.in/If-youve-made-your-first-Mutual-Fund-investment-here-is-what-you-should-do-next/articleshow/47176866.cms">investment</a> avenues, but the ones that you have require a nominee and its best to review the nominee’s name once you get married and later, have a child. Better still, make a will. 
 
2.Pay-Off Debt: You should be assuming as little debt as possible, and <a href="http://www.businessinsider.in/Mortgage-Protection-6-ways-to-come-out-of-a-loan-trap/articleshow/47097827.cms">paying off</a> outstanding credit card bills is of paramount importance. The amount of penal interest that credit card companies charge puts even seasoned money lenders to shame. Have NIL outstanding balance on your credit card. 
 3.Get Term Insurance: If you have dependents, then do ensure that they have at least two years’ worth of expenses to pay for in case something untoward happens to you. Calculate 24 months’ worth of expenses, add 20 percent to them and get a term cover for that amount. Keep adding to your term cover every two years as both your salary and certainly your expenses rise each year. Remember not to confuse insurance with investment. If your advisor tries to lure you into a ULIP or a monthly <keyword id="35471" type="ORGANIZATION" weightage="100" keywordseo="SIP">SIP</keyword>, from an insurance company, masquerading as a Life cover, then you should abandon that advisor immediately. 
 
4.Get Medical Insurance: In addition to the one that your employer offers. Often, people leave an organization in a huff, only to 
realise that they and their family are bereft of any medical <a href="http://www.businessinsider.in/6-pre-marriage-financial-decisions-everyone-should-take-before-saying-I-Do/articleshow/47865034.cms">insurance</a>. The same happens when there are sudden job losses announced by companies. Hence, it is always best to have a parallel medical insurance paid for by yourself. In any case you get a tax benefit in your annual <keyword id="6354751" type="COMPANY" weightage="100" keywordseo="Income-Tax">income tax</keyword> returns. 
 
In addition, keep money worth 5-6 months of expenses in a money market liquid fund so that if you have an unforeseen run-in with your boss, or you decide to go your own way then at least half-year’s worth of expenses are arranged for. Welcome to investing now that most risks are taken care of. 
 5.Public Provident Fund: The government pays you 8.5 percent compounded interest on your PPF <keyword id="6362476" type="ORGANIZATION" weightage="100" keywordseo="investments">investments</keyword>. They also help you save tax. Investments worth 100,000 rupees a year are allowed. These funds are locked in for at least five years and the government allows only a certain amount of money to be withdrawn from the account as it is meant for your old age, when income will dwindle but expenses will keep on rising. 
 There is a lot of debate among <keyword id="143983" type="POSITION" weightage="100" keywordseo="investment-advisors">investment advisors</keyword> whether PPF should be maintained or not considering that the rate of interest often falls below the rate of <keyword id="22195" type="COMPANY" weightage="100" keywordseo="Inflation">inflation</keyword>. However, its best to have some sort of fixed interest bearing income in your investment portfolio and this should be encouraged. 
 
6.Equity Funds: Just run a simple monthly Systematic Investment Plan into a well-diversified equity fund at the start of your professional life. Increase the SIP by 5-10 percent each year as that is what your average annual increment will be. And don’t look at that money till you retire. The best time to start your SIP is today! Do not go into sector specific funds, no matter what your broker tells you. 
 
7. Buying a House: If you can afford one, certainly do so. But do not invest into multiple homes across many cities. It’s a waste of investible surplus, its tax-inefficient, it is relatively ill-liquid and the average returns via rentals over years are much below those earned from equities. 
 
Lots of people feel investing is a very difficult thing to master and hence, prefer to keep money in fixed deposits. While FDs ensure that your capital remains protected, the returns via interest income are taxed, beyond a certain amount of interest earned, and in any case the rate of interest is below inflation rate. It’s a non-efficient way of utilising your money. 
 
If you take these 7 steps then you are cruising on the investment highway! 
 
(Image credits: Indiatimes)

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