The recent decision of the EPFO (Employees' Provident Fund Organization) regarding the payment of 8.5% interest to its subscribers for the year of 2009-10, is going to benefit its more than forty million subscribers.

Nearly 40 million workers who have kept back their retirement money with the EPFO (Employees' Provident Fund Organization) will find their names in the recipients' list. Reports emerging from labour ministry said that this all could be possible just because of new fund managers who helped EPFO bring in enhanced returns.

Labour Secretary Sudha Pillai told Reporters, "We will be able to give 8.5 percent without dipping into our reserves."

He further added that between the months of September and March, EPFO brought in a minimum interest of 8.68 per cent.

The authorization to manage the savings flowing into EPFO, have been given to HSBC Asset Management Co. Ltd, Reliance Asset Management Co. Ltd, ICICI, Prudential Asset Management Co. Ltd.

According to A. D. Nagpal (EPFO trustee) the interest payment can be increased to 9.5%; but it could be done by using reserves to pay out more than what it has earned. It may be noted here that in 2007-08, also, an interest rate of 8.5% was paid by EPFO; but it had to take some of the money from its reserves for doing so.

It was the rising inflation that incited the central bank to raise interest rates until September which in turn pushed up returns on fixed income investments.

A. Viswanathan (Former central provident fund commissioner) told reporters that the organization manages approximately Rs 3 trillion. The funds are invested chiefly in Unions and state government securities and public sector bonds.