Faced with financial constraints, the Employees’ Provident Fund Organisation may offer 8.5% interest for 2013-14 on EPF deposits of its 11 crore subscribers, as the fund will be left with a small surplus of R57 crore.
The central board of trustees will meet on January 13 to finalise the interest rate for 2013-14, apart from taking cognisance of EPFO's financial performance and its ability to pay a minimum pension of R1,000 per month.
While trade unions have been demanding a hike in the interest rate, EPFO's internal calculations show it will require an additional R600 crore to hike the rate to 9% from the 8.5% in 2012-13.
According to EPFO’s estimates, the liability for 2013-14 would be around R20,740 crore if the interest rate is set at 8.5% whereas income would be R20,797 crore, leaving a small surplus of R57 crore. EPF's corpus stood at about R3 lakh crore at the end of October 2013.
Sources said the fund’s predominant exposure to government securities has lowered the chances of earning a higher interest income and, hence, offering a higher rate to subscribers.