PF interest Rate reduced to Four-Decade Low of 8.1%

PF Interest Rate: Employees’ provident fund interest rate for 2021-22 has been slashed from the existing 8.5 per cent to 8.1 per cent for 2021-22 on Saturday. This is the lowest rate since 1977-78, when it was 8 per cent, labour ministry sources said.

There are around five crore subscribers of employees provident fund organsation (EPFO). The decision was taken during the meeting of the EPFO’s central board of trustees, which was held in Guwahati. The board’s recommendation will be sent to finance ministry soon.

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Once the finance ministry ratifies the board’s decision, EPFO will direct its field offices to credit the interest income calculated at the new rate of 8.1 per cent for 2021-22 in the subscribers’ accounts.

The interest rate was 8.5 per cent in 2020-21. EPFO had credited 8.0% as interest rate in 1977-78. Since then, it has been either 8.25% or more. The retirement fund body had credited 8.5% in 2019-20 and 2020-21 while it was 8.65% in 2018-19, 8.55% in 2017-18, 8.65% in 2016-17 and 8.8% in 2015-16.

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

However, the finance ministry has to vet the interest rate declared by CBT before it is notified. The interest income gets credited into the subscribers’ account after being notified

Finance ministry has been nudging the labour ministry to lower the interest rate on provident deposits and to bring them at par with other small saving schemes.