The Finance Ministry has given its nod for the Labour and Employment Ministry to fix the rate of interest payable to EPF subscribers at 8.25 per cent for 2011-12, instead of at 9.5 per cent paid in 2010-11.
This will bring down the effective rate from 9.5 per cent to 8.25 per cent. The rate is the interest that the Employee ProvidenFund Organisation (EPFO) offers its depositors.
The Board of Trustees of the EPFO, which includes representatives of labour unions too, approved the proposal to leave the financial decision on the interest rate to the Labour and Finance Ministries, the official said.
The Board, at its meeting on December 23 last, empowered the Labour Ministry to take the decision in view of the plea for reducing the interest this year (2011-12) to 8.25 per cent.
In 2010-11, the rate was fixed at 9.5 per cent, thanks to availability of a surplus fund of Rs. 1,731 crore.
The rate cut will affect about 4.7 crore workers across 5.7 lakh establishments.