EPF Interest Rate: EPFO invests the money deposited in the account of PF account holders at many places. A part of the earnings from this investment is given to the account holders in the form of interest. In March, the EFPO had reduced the interest rate for the financial year 2021-22 from 8.5 percent to 8.1 percent. The government has made its stand clear regarding the change in interest rate.
A big update has come regarding Employees’ Provident Fund (EPF). It was being said that the government may soon change the interest rate on EPF. Last month itself, the central government had approved 8.1 percent interest rate on Employees’ Provident Fund (EPFO) deposits for 2021-22. Now the Minister of State for Labor and Employment, Rameswar Teli in Parliament has cleared the government’s stand regarding the change in interest rate. He has given information to the Rajya Sabha in a written answer to a question.
No proposal for change
Rameshwar Teli was asked whether the government would reconsider increasing the rate of interest on the amount deposited in EPF. Responding to this, he made it clear that there is no proposal to reconsider the interest rate. Also, Rameshwar Teli told that the interest rate of EPF is higher than the interest rate available on many government schemes. He told that the interest rate of EPF (8.10 percent) is higher than the interest available on Senior Citizen Savings Scheme (7.40 percent) and Sukanya Samriddhi Account Scheme (7.60 percent).
Based on the recommendation of the CBT, the Center in June this year had approved an interest rate of 8.1 per cent on PF deposits for 2021-22. The Minister of State said that the interest rate is dependent on the income received from the investment of EPF. It is distributed only as per the EPF Scheme, 1952.
Lowest interest in four decades
Right now the rate of interest on PF is at the lowest level in several decades. EPFO has fixed the rate of interest of PF at 8.1 percent for 2021-22. This is the lowest rate of interest on PF since 1977-78. Earlier in 2020-21, PF was getting interest at the rate of 8.5 percent. There was no change in the PF interest rate in the fiscal year 2020-21 (FY21). Just a year before this, in 2019-20, this interest rate was reduced from 8.65 percent to 8.5 percent.
Where would the PF money be invested?
EPFO invests the amount deposited in the PF account holder’s account at many places. A part of the earnings from this investment is given to the account holders in the form of interest. At present, EPFO invests 85 per cent in debt options. These also include government securities and bonds. The remaining 15 per cent is invested in ETFs. The interest of PF is decided on the basis of earning from debt and equity.
