Employees Provident Fund interest rate cut to 8.5%
05 March 2020
Retirement fund body Employees' Provident Fund Organisation (EPFO) on Thursday announced an interest rate of 8.5 per cent for the current financial year, a 15 basis point reduction from the interest rate of 8.65 per cent paid on EPF investments for financial year 2018-19. The move is likely to impact around 60 million subscribers of the provident fund scheme.
The decision was taken at a meeting of the Central Board of Trustee (CBT), which is the top decision-making body of the EPFO.
“The Central Board of Trustees (CBT) has decided to decrease the rate of Employees' Provident Fund (EPF),” labour minister Santosh Gangwar said after the meeting.
Gangwar said the EPFO will have a surplus of over Rs700 crore after providing for the new interest rate for the current financial year.
The interest rate was decided after a careful evaluation of the prevailing market situation, and any rate above 8.5 per cent could have had an impact on the stability of the EPF corpus, sources in the labour ministry said.
“The decision has been taken after balancing the interest of workers and the EPF corpus… It is the best rate possible under the existing market reality,” the ministry stated in a release.
The interest rate proposal will now be sent to the finance ministry for its approval. The interest amount is credited to the accounts of the subscribers after the finance ministry’s nod.
The finance ministry has been nudging the labour ministry for aligning the EPF interest rate with small saving schemes.