A similar rate hike has also been effected in a special deposit scheme (SDS) where nongovernment retirement funds have invested over 1 lakh crore. This could boost the Employees’ Provident Fund (EPF) rate next year, which was slashed last week from 9.5% to 8.25% for 2011-12.
Both the interest rate hikes are effective from December 1, 2011 — the same day that returns on the Public Provident Fund (PPF) and National Savings Certificates (NSCs) were raised to 8.6% and 8.7%, respectively.
Traditionally, the interest rate on the GPF, the SDS and the PPF rate have moved in tandem. In November, the government had announced a hike in the return on PPF and NSCs.
Government employees, on the other hand, will receive 8% interest on their GPF savings from April 2011 to November 2011 and 8.6% for the next four months of this financial year.