Provident Fund

Respected Members,
 
Please help in calculation of Interest on un recognized provident fund. The organization does not have any set rules for calculation of interest.
Currently on the closing balance (i.e. Opening Balance in Individual account + contributions during the year), interest is calculated at a specified rate. The formula used for interest calculation is                                                                      CLOSING BALANCE*RATE OF INTEREST IN % DIVIDED BY 12
 
I am of the opinion that the formula should be just CLOSING BALANCE*RATE OF INTEREST IN %
 
If we take rate of interest at 12% , on a closing balance of  Rs.1000, than the interest amount is only Rs.10.
 
It will be niece if you let me know the correct method of calculating interest. It will be niece if some one lets me know how EPO, calculates interest.
 
Thanks & Regards well in advance
Replies (1)

You have to calculate interest on monthly basis. For first month Opening + contribution for first month. In the second Opening + contribution for first & second month + interest for first month. This process should be continued. This is followed in Airport Authority of India's CPF Contriobutory Trust, which has a memebrship of more than 15,000 staff.

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