Government approves 8.1% EPF interest rate for 2021-22
The Employees’ Provident Fund Organization (EPFO) will soon start charging its members an interest rate of 8.1% for 2021-22 as the finance ministry has ratified the rate proposed by the retirement fund body in March.
In March, the Central Board of Trustees (CBT), the highest decision-making body of the EPFO, decided to reduce the interest on provident fund deposits for 2021-22 to a four-decade low of 8.1% for about 65 years. million customers. It was the state with the lowest EPF interest since 1977-78, when it was 8%, but higher than the returns small savers would get under any other fixed income schemes.
For 2020-21, the interest rate for EPF was fixed at 8.5% as in the previous financial year.
“Ministry of Labor & Employment, Government of India has conveyed the approval of the Central Government to credit the interest @ 8.1% for the year 2021-22 in the account of each member of the EPF Scheme. Accordingly, you are requested to issue necessary instructions to all concerned to credit the said interest rate to the member accounts,” Additional Central PF Commissioner (Investment) Abhay Ranjan said in a note to the heads of regional and regional offices of EPFO.
As per practice, the rate offered by the CBT needs to be approved by the finance ministry before crediting individual employees’ provident fund (EPF) accounts, even as the EPFO pays interest from its income without depending . Treasury
The ratification for 2021-22 came a little early. For 2020-21, it came around the end of October 2021.
CBT member KE Raghunathan, who represents employers in the tripartite body, lauded the speed at which the government approves the interest rate for 2021-22.
“Given the dire need of funds in the hands of the employees, this is really appreciable and it will surely help them to meet the expenses like educational needs of their children,” he added.
At 8.1%, the EPFO will have to pay around Rs 76,000 crore as interest to its subscribers for 2021-22, leaving it with a marginal surplus of Rs 450 crore. The EPFO now receives over Rs 2.1 trillion as subscription annually and invests its accumulated corpus – about Rs 18 trillion – in debt and equity instruments in an 85:15 ratio.