On Saturday, in a blow to salaried and middle-class people, the Employees’ Provident Fund Organisation (EPFO) proposed to cut the interest rate on provident fund deposits from 8.5% to 8.1% for 2021-22.
With an impact on over 6 crore subscribers, this is the lowest interest rate on deposits in the past four decades.
The EPFO’s central board of trustees took the decision in a meeting chaired by Labour Minister Bhupender Yadav in Guwahati.
Bhupinder Yadav, addressing the meeting, said, “I feel good to announce 8.1% interest rate on EPF savings for 2021-22 at a time when a 10-year FD with SBI yields just around 5.4% returns, while returns on savings instruments like the PPF are in the range of 6.8% to 7.1%.”
In the past four years, the interest rate on Provident Fund has been slashed several times. The interest rate on provident fund deposit in year 2019-20 was 8.5%, while in 2018-19 it was 8.65% and 8.55% in 2017-18. The EPF interest rate came close to 8.1% last time in year 2011-12 when the retirement fund body paid 8.25-8.5% rate to its subscribers.
The finance ministry will now decide on approval to the recommendations made by the board. The EPFO, once the finance ministry approves the recommendations, will direct its field offices to credit the interest income calculated at the new rate of 8.1% for 2021-22 in the subscribers’ accounts.
Rs 16 lakh crore of retirement savings, belonging largely to formal sector workers, are managed by the EPFO.
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