New Delhi: The Employees’ Provident Fund Organisation (EPFO), India’s biggest pension fund, aims to pay 8.5% interest to its 40 million-plus subscribers for 2009-10, as new fund managers have helped it earn better returns, a top labour ministry official said on Thursday.
“We will be able to give 8.5% without dipping into our reserves,” labour secretary Sudha Pillai told Reuters in an interview, adding that the fund earned a minimum interest of 8.68% between September and March.
Speeding inflation prompted the Reserve Bank of India (RBI) to raise interest rates until September, pushing up returns on fixed income investments, including government bonds, which form a bulk of the fund’s investments.
Last year, banks had been offering interest as high as 11.5% on term deposits while bond yields surged as the global financial crisis choked liquidity and raised borrowing costs.
The global slump that followed the financial crisis in the second half of the fiscal has trimmed India’s factory output and exports, forcing firms to slash jobs for cutting losses.
The labour ministry would seek incentives in the July budget for firms to help them retain and create more jobs, said Pillai.