Centre cuts EPFO ​​interest rate; Know when will you get 'interest money'

New Delhi:

The Central Government has approved 8.1% interest rate on Employees’ Provident Fund Deposit (PF Interest) for 2021-22. The Centre approved reduction of interest rate on Employees’ Provident Fund (EPF) deposits from 8.5 per cent to 8.1 per cent for 2021-22 for around 6 crore customers. The decision, taken by the EPFO in March this year, brings down the interest rate on PF deposits to the lowest level in over four decades.

According to an official order by the retirement fund body, the Ministry of Labor and Employment conveyed the Central government’s approval to credit 8.1 per cent interest rate instead of 8.5 per cent provided in 2020-21. The Union Labor Ministry had sent the proposal to the Finance Ministry. Now, after the ratification of the interest rate by the government, EPFO will start depositing fixed interest rate for the financial year in the EPF accounts. The lowest interest rate before this was in 1977-78, when it was 8 per cent.

EPFO invests 85 per cent of its annual accruals in debit instruments including government securities and bonds and 15 per cent in equities through ETFs. Income from both debit and equity is used to calculate interest payments.

The interest rate was slightly higher at 8.8 per cent in 2015-16. It had given 8.75 per cent interest in 2013-14 as well as 2014-15, which is higher than 8.5 per cent in 2012-13. The interest rate in 2011-12 was 8.25 per cent. 12% of the amount made by adding basic salary and dearness allowance of an employee is deposited in his PF account. Out of 12% of the company’s contribution, 3.67% goes to the employee’s PF account (EPF) and the remaining 8.33% goes to the Employees’ Pension Scheme (EPS).


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