On Wednesday, the central board of the Employees Provident Fund Organisation (EPFO) said that it would pay out the 8.5 per cent interest to the EPF subscribers for 2019-20 in two instalments. The retirement fund body has decided to credit 8.15 per cent interest into the subscribers’ account first, while the remaining 0.35 per cent will be credited in December.

‘There is no going back on the 8.5 per cent rate for FY20, but the current situation has pushed us to go for two instalments. Some of the investments could not be encashed due to bad market situation, hence this new formula,’ said Virjesh Upadhyay, a central board trustee of the EPFO.

As per EPFO’s calculations, after paying out the 8.5 per cent interest for 2019-20, it will be left with a surplus of Rs 700 crore, against Rs 349 crore in the previous fiscal.

The retirement fund body’s earnings in March were lower than expected, due to the pandemic. While preparing the income projection in March for the given financial year, the EPFO had factored in an income between Rs 3500 crore and Rs 4000 crore from dividends and sale of exchange-traded funds.

The retirement fund body’s income declined due to bad market situation, an EPFO official told Mint, requesting anonymity. However, he refused to comment on the course of action if the market meltdown continues amid a slowing economy.

In March, the retirement fund manager had announced 8.5 per cent interest payout for 2019-20, lowest in seven years. The 8.5 per cent rate was 15 basis points below the 2018-19 financial year payout, impacting earnings of over 50 million active subscribers. The last time EPFO had paid an 8.5 per cent rate was in 2012-13.