Retirement fund body EPFO on Saturday dropped interest rate on employees’ provident fund to 8.1 per cent for 2021-22, the lowest in over four decades for its about five crore subscribers, from 8.5 per cent provided in 2020-21, news agency Press Trust of India reported citing sources.
This is the lowest since 1977-78, when the EPF interest rate stood at 8 per cent.
"The Employees' Provident Fund Organisation's (EPFO's) apex decision making body Central Board of Trustees has decided to provide 8.1 per cent rate of interest on Employees Provident Fund (EPF) for 2021-22 in its meeting held on Saturday," a source said.
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 and thereafter, EPFO issued directions to field offices to credit the interest income at 8.5 per cent for 2020-21 into the subscribers' account.
Now, after the CBT decision, the interest rate on EPF deposits for 2021-22 will be sent to the Ministry of Finance for concurrence. EPFO provides the rate of interest only after it is ratified by the government through the finance ministry.
In March 2020, 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 provided for 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 8.5 per cent for 2012-13.
The rate of interest was 8.25 per cent in 2011-12.