Govt Approves Four-Decade Low 8.1% Interest on Epf Deposits

BANKING AND ECONOMY

The Union Ministry of Finance approved an 8.1% rate of interest for each member of the EPF scheme on employees' provident fund deposits for the fiscal year 2021-22. 

The interest rate of 8.1% was recommended by the Employees' Provident Fund Organisation (EPFO) on provident fund deposits for the financial year 2021-22. This is the lowest since 1977-78 when the EPF interest rate stood at 8%. The highest interest rate was 8.8% given in the fiscal year 2015-16.

The interest rate was reduced from 8.5% provided in the fiscal year 2020-21. This rate of interest of 8.5% was decided by the Central Board of Trustees (CBT) in March 2021 and was ratified by the Union Ministry of Finance in October 2021.

The EPFO is to credit the fixed rate of interest for FY22 into the EPF accounts.

The interest rate on Employees Provident Fund deposits was calculated based on the earnings from both debt and equity of the Retirement fund body EPFO. The body invests 85% of its annual accruals in debt instruments, including government securities and bonds, and 15% in equity through ETFs.

 

   Important points for the exam:

  • The Union Ministry of Finance approved an 8.1% rate of interest for each member of the EPF scheme on employees' provident fund deposits for the fiscal year 2021-22. 
  • The interest rate of 8.1% was recommended by the Employees' Provident Fund Organisation (EPFO) on provident fund deposits for the financial year 2021-22. 
  • This is the lowest since 1977-78 when the EPF interest rate stood at 8%. 
  • The interest rate was reduced from 8.5% provided in the fiscal year 2020-21. 
  • The provident fund is a combined contribution from the employee and the employer that is deducted from the salary every month and put away in a PF account where it grows into a sizeable sum that can avail after retirement.

   Facts to know:

  • Employees' Provident Fund Organisation (EPFO) was established in 1952.
  • Headquarters of EPFO: New Delhi.
  • EPFO functions under the Government of India's Ministry of Labour and Employment.
  • Union Minister of Labour and Employment: Mr.Bhupender 
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