The decision will impact around five crore PF subscribers.New Delhi: Employees' Provident Fund Organisation (EPFO) has reduced interest rates to the lowest in more than 40 years for the current financial year.
On Saturday, the retirement fund body had decided to reduce the interest on provident fund (PF) deposits for 2021-22 to 8.1 per cent from 8.5 per cent in the previous fiscal, 2020-21.
The reduction marks the lowest interest rate since 1977-78 when the figure stood at 8 per cent.
EPFO is the top decision making body Central Board of Trustees (CBT).The Finance Ministry will now vet the interest rate recommended by the CBT and issue notification.The decision will impact around five crore PF subscribers.
The rate was kept unchanged in 2020-21.In 2019-20, EPFO had cut the rate on PF 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.The retirement fund body had provided an 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18.The rate was slightly higher at 8.8 per cent in 2015-16.EPFO had given an 8.75 per cent rate of interest in 2013-14 as well as in 2014-15, higher than 8.5 per cent for 2012-13.The rate of interest was 8.25 per cent in 2011-12."EPFO despite following a conservative approach towards investment, has consistently generated high returns over the last many years which has enabled it to distribute higher interest to its subscribers, through various economic cycles with minimal credit risk, the Ministry of Labour and Employment stated.