EPF interest rate slashed to 8.10 percent, lowest in decades
EPF interest rate 2021-22: The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation has decided to pay 8.1 per cent rate of interest for its subscribers for the financial year 2021-22.
The decision was taken in EPFO‘s central board of trustees meeting on Saturday. This interest rate is the lowest in at least four decades.
In March of last year, the EPFO Board approved an 8.5 percent interest rate recommendation for the fiscal year 2020-21.
The CBT, which is chaired by the Union Labour Minister and includes representatives from both employers and employees, determines the interest rate recommendation. The Finance Ministry then ratifies the recommendation.
Despite significant withdrawals in the wake of Covid's impact on people's financial resources, the EPFO kept the interest rate on PF deposits at 8.5 percent for 2020-21, the same as in 2019-20. Following the Covid-19 pandemic, the retirement fund body faced large withdrawals and lesser contributions. Until December 31, the EPFO had settled 56.79 lakh claims totalling Rs 14,310.21 crore under the advance facility.
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Over the years, the Finance Ministry has questioned EPFO's retention of a rather high rate, pressing it to lower it to below 8%, in line with the overall interest rate scenario. Among other savings instruments, the EPFO rate remains the highest. Despite a drop in overall market rates, small savings rates have remained steady in recent quarters, ranging from 4% to 7.6%.
The EPFO's exposure to IL&FS and similar risky entities, as well as the 2019-20 interest rate and the 2018-19 interest rate of 8.65 percent, have been questioned by the Finance Ministry.
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-PTC News
