INDIA - The Employees Provident Fund, the main government-operated savings plan in India has announced it will cut interest rates to 8.5% for the financial year 2005-2006 to its 40 million participants, according to Watson Wyatt.
During the last three years, the interest rate paid by the Employees Provident Fund organisation (EPFO) stood at 9.5%.
Watson Wyatt claimed that some political parties and trade unions have been pressuring the government to retain that level but Labour party minister Chandrasekhar Rao said the rate would have to be reduced to 8.5% to lesson the financial impact on the fund.
Despite the cut, the fund is expected to face a shortfall between the income earned on its investments and the interest declared for the benefit of its members of some US$85m in the current financial year.
In addition to to this measure, the EPFO is planning to collect arrears from defaulters and use unclaimed deposits to meet the shortfall.
The fund covers most private sector workers, most of whom contribute 12% of their wages to the fund, the same level as the employees. By Daniel Flatt
HMRC has confirmed providers operating relief at source pension schemes can continue to collect automatic tax relief at a basic rate of 20% under new Scottish Income Tax rules.
The Pensions Regulator (TPR) is seeking "improved" powers to set a schedule of contributions in defined benefit (DB) schemes in the government's upcoming white paper, it has revealed.
New regulatory rules which require providers and advisers to produce annuity illustrations will not solve the problem of consumer detriment as they are "fundamentally" flawed, according to Retirement Advantage.
Paul Budgen is set to join financial technology and auto-enrolment (AE) firm Smart Pension as director of business development.