The retirement fund body has decided to credit 8.15% interest into the subscribers’ account first, while the remaining 0.35% will be credited in December.

“There is no going back on 8.5% 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% interest for 2019-20, it will be left with a surplus of ₹700 crore, against ₹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 ₹3500 crore and ₹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 slowing economy.

In March, the retirement fund manager had announced 8.5% interest payout for 2019-20, lowest in seven years. The 8.5% 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% rate was in 2012-13.