The cut in administrative charges — which was notified on Mar 15 — is to reflect the lower costs of administering the funds in light of increased computerization and automation. Eventually, the administrative charges will be reduced to zero.
The decision will benefit crores of workers whose savings are managed by the EPFO.
With Rs 8.5 lakh cr (around $128 bln) under management, the EPFO has one of the world’s largest funds under its control.
The body wanted to cut the administration charge as early as December, but the Election Commission of India had put a stop to the move as several states were going to the polls in February and March and the move could be seen as a pre-poll sop.
The Election Commission, however, did not prevent the body from announcing a cut in the interest rate offered on the deposits for the ongoing financial year to 8.65% from 8.8% in 2015-16.
It is mandatory for employers in India’s organized sector to open and maintain a provident fund account with the EPFO. Contributions to the fund have to be made by both the employer and the employee.
The fund can be withdrawn either at the time of retirement or if an employee goes without a job for at least two months.