Provident Fund Interest raised 1%(100 basis points)

Its great news for all Public and Private sector employees in India. The Provident Fund Trustees today decided to give a higher interest rate of 9.5 per cent for 2010-11 on their retirement savings.

This hike 100 basis points (1%) has taken the interest on PF deposits of 4.71 crore (47 million) people  working in organised sector from the current level of 8.5 per cent. The decision to raise the interest rate was taken by the Central Board of Trustees in favour of the employees, due to rise in Interest rates in recent times.

This decision would result in a deficit of about Rs.1,600 crore ( 16 billion), Although this requires approval from Finance Ministry, it is highly unlikely that it may not be approved.

Considering the beneit of Power of Compounding, this 1% hike, if sustained for few more years will result in much higher Net Yield on our Provident Fund Corpus.

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