There is good new for the PF subscribers because interest rates may go up for the year 2010-11. This hasn’t been decided by the Employee Provident Fund Organization(EPFO) but they will announce it soon. The news came just last week that EPFO got the nod from Central Board of Trustee(CBT) to invest the huge corpus into the corporate bonds which will yield good returns for the PF subscribers. The agreement made with restrictions. I will explain in this article.
Invest in Corporate Bonds
The country’s largest retirement fund will vote on a landmark proposal to invest around $1 billion annually in bonds issued by
blue-chip private firms, which, if it goes through, could help boost its single-digit returns and add depth to the moribund corporate bond market.
The idea to invest the huge amount of PF subscribers into the corporate bonds has been put in front of the CBT few weeks back. They need to approve the proposal to proceed further. They given nod to EPFO with few restriction on safety for the millions of PF subscribers. The following are the few facts about the new plan for EPFO:
- They can invest in the company only if the govt. has at least 26% stake on the company.
- It is not allowed to invest in the private companies.
- The interest rates for the FY 2010-11 is not yet decided. They require some more time to assess the expected return for the investment.
- EPFO has increased the settlement amount from Rs.60000 to Rs.1lac for the unexpected death of PF subscriber’s family.
- Also they are working on to speedup claims processing and settlement.
I hope this will be good new for the salaried sector. As we already know PF is one of the good savings for the retirement with high yield. Current interest rates for the PF is 8.5%. If it increases to 8.75% will help millions of people in India. I will update the news once it is announced. Please subscribe for free to get the latest news.
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