NEW DELHI, Mar 12: Interest rate on employees’ provident fund deposits today was cut to a four-decade low of 8.1 per cent for the 2021-22 fiscal from 8.5 per cent in the previous year.
This is the lowest interest rate since 1977-78 on deposits that employees make towards their retirement fund. Interest rate on employees provident fund that year stood at 8 per cent.
The 8.1 per cent interest rate was recommended by the Central Board of Trustees (CBT) after its meeting in Guwahati under the chairmanship of Union Labour and Employment Minister Bhupendra Yadav, a Labour Ministry statement said.
“The Central Board recommended 8.10 per cent annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2021-22 (ending on March 31, 2022),” it said.
The recommendation will now go to the Union Finance Ministry and will be notified once it is approved by it.
“The interest rate would be officially notified in the Government gazette following which EPFO would credit the rate of interest into its subscribers’ accounts,” the statement said.
The EPFO paid 8.5 per cent interest rate to its subscribers in 2020-21, the same as in the previous year. The EPF rate was 8.65 per cent in 2018-19 and 8.55 per cent in 2017-18. In 2016-17, the EPF interest rate was at 8.65 per cent.
The EPFO has a surplus of around Rs 450 crore after paying at a rate of 8.1 per cent. Employee representatives sought higher interest rates but the CBT settled for 8.1 per cent.
Sources said that interest rates are fixed based on the earnings of the retirement fund body on the deposits it has. While the corpus has gone up by 13 per cent, interest income is up only 8 per cent.
A CBT member said the interest rate setting reflects the state of the Indian economy and the difficulty the EPFO faces in generating returns from a sizeable corpus.(PTI)
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