Retirement fund body Employees Provident Fund Organisation (EPFO) on Monday announced arise in interest rate on provident fund (PF) deposits to 8.75 per cent for 201314, to benefit 50 million subscribers.

The interest rate on PF deposits in the previous financial year was 8.5 per cent. The decision to raise the rate was taken by the Central Board of Trustees (CBT), the apex decision making body of the EPFO.

"We have decided to recommend to the government an 8.75 per cent rate for 2013- 14 to its subscribers," Labour Minister Oscar Fernandes, who chaired the CBT meet, said. The EPFOs recommendations would now be vetted by the finance ministry. Once the ministry gives its concurrence to the decision, the interest would be credited into the accounts of subscribers.

EPFO Central Provident Fund Commissioner K K Jalan said: " We have estimated an income of ₹ 25,048.5 crore for 2013- 14. EPFO would require ₹ 25,005.4 crore for providing an 8.75 pre cent rate of interest for this financial year and leave a surplus of ₹ 43 crore." EPFO also announced a 20 per cent cover increase in Employees Deposit Linked Insurance Scheme as an interim measure. Under this scheme, the family of a worker can get a maximum sum assured of ₹ 1,30,000 in case of his/ her demise during the service period.

After the raise, the maximum amount would be ₹ 1,56,000.

The CBT has also approved increasing minimum administrative charges for managing EPF Scheme and EDLI Scheme to ₹ 500 and ₹ 200 a month from ₹ 5 and ₹ 2, respectively. The charges for non- functional firms having no contributory members have also been increased to ₹ 75 and ₹ 25 per month, respectively, for the two schemes.

EPFO has a corpus of ₹ 5 lakh crore.

When asked about its plans to improve investments, particularly Special Depositor Scheme ( SDS) which earns an eight per cent rate of return, Jalan said: " We will definitely take out money from SDS and invest in high- yielding instruments. We will soon work on aproposal." On the labour ministers idea of deducing extra 10 per cent on basic wages by EPFO for providing housing to workers, the he said: " We will work on the proposal. He has a lot of experience." The CBT also initiated the process for selection of multiple fund managers and formed a panel to appoint a consultant for the purpose.

Announces 20% rise in cover under Employees Deposit Linked Insurance Scheme