Finance
The government has approved an 8.1 percent interest rate on employees’ provident fund (EPF) deposits for 2021-22, a four-decade low for the retirement fund body EPFO’s five crore subscribers.
The Employees’ Provident Fund Organisation (EPFO) decided earlier this year to reduce the interest rate on provident fund deposits for 2021-22 to 8.1 percent, down from 8.5 percent in 2020-21.
According to an EPFO office order issued on Friday, the Ministry of Labour and Employment has conveyed the central government’s approval to credit an 8.1 percent rate of interest to each member of the EPF scheme for 2021-22.
The proposal had been sent to the Ministry of Finance for approval by the Ministry of Labour. After the government approves the interest rate, the EPFO will begin crediting the fixed rate of interest for the fiscal year into EPF accounts.
The 8.1 percent EPF interest rate is the lowest since 1977-78, when it was 8%. The Central Board of Trustees (CBT) set the 8.5 percent interest rate on EPF deposits for 2020-21 in March 2021.
The proposal had been sent to the Ministry of Finance for approval by the Ministry of Labour. After the government approves the interest rate, the EPFO will begin crediting the fixed rate of interest for the fiscal year into EPF accounts.
The 8.1 percent EPF interest rate is the lowest since 1977-78, when it was 8%. The Central Board of Trustees (CBT) set the 8.5 percent interest rate on EPF deposits for 2020-21 in March 2021.
The finance ministry approved it in October 2021. Following that, the EPFO directed field offices to credit the 8.5 percent interest income to subscribers’ accounts for 2020-21.
K E Raghunathan, an EPFO trustee who represents employers, said the speed with which the ministries of labor and finance cleared the interest rate is really commendable, given the dire need for funds in the hands of employees, and it will help them meet expenses such as their children’s educational needs.
The EPFO cut the interest rate on provident fund deposits to a seven-year low of 8.5 percent in March 2020, down from 8.65 percent in 2018-19.
The 2019-20 EPF interest rate was the lowest since 2012-13, when it was reduced to 8.5 percent. EPFO offered 8.65 percent interest rate to its subscribers in 2016-17 and 8.55 percent interest rate in 2017-18.
In 2015-16, the interest rate was slightly higher at 8.8 percent. It offered an interest rate of 8.75 percent in 2013-14 and 2014-15, up from 8.5 percent in 2012-13. In 2011-12, the interest rate was 8.25 percent.
Source:BS
