PF Update: EPF interest rate of 8.1% approved by govt; Details here

In March, EPFO slashed the interest rate on employees' provident fund deposits to a four-decade low of 8.1 percent for the fiscal year 2021-22,

New Delhi: The central government has approved an 8.1 percent interest rate on employee provident fund deposits for the fiscal year 2021-22. This is announced after the Union Finance Ministry authorises the interest rate.

In March, the Employees' Provident Fund Organisation, or EPFO, slashed the interest rate on employees' provident fund deposits to a four-decade low of 8.1 percent for the fiscal year 2021-22, down from 8.5 percent the year before. On employee deposits to their retirement fund, this is the lowest interest rate since 1977-78. That year, the interest rate on employee provident funds was 8%.

According to an EPFO office order issued on Friday and reviewed by PTI, the Ministry of Labour and Employment has conveyed approval of the central government to credit 8.1 per cent rate of interest for 2021-22 to each member of the EPF scheme.

The labour ministry had sent the proposal to the Ministry of Finance for its concurrence.

Now, after the ratification of the interest rate by the government, the EPFO would start crediting the fixed rate of interest for the fiscal into the EPF accounts.

The 8.1 per cent EPF rate of interest is the lowest since 1977-78, when it stood at 8 per cent.

The 8.5 per cent interest rate on EPF deposits for 2020-21 was decided by the Central Board of Trustees (CBT) in March 2021.

It was ratified by the finance ministry in October 2021. Thereafter, the EPFO issued directions to field offices to credit the interest income at 8.5 per cent for 2020-21 into the subscribers' account.

An EPFO trustee, K E Raghunathan, who represents employers, said the speed with which the ministries of labour and finance have cleared the interest rate is really appreciable, considering the dire need of funds in the hands of employees and it will help them meet expenses such as educational needs of their children.

In March 2020, the EPFO had lowered the interest rate on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent in 2018-19.

The EPF interest rate provided for 2019-20 was the lowest since 2012-13, when it was brought down to 8.5 per cent.

EPFO had provided 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18.

The rate of interest was slightly higher at 8.8 per cent in 2015-16. It had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than the 8.5 per cent for 2012-13. The rate of interest was 8.25 per cent in 2011-12.

With inputs from agencies.