The Centre on Friday approved the reduction of rate of interest on the employees' provident fund (EPF) deposits for 2021-22 – from 8.5 per cent to 8.1 per cent – for almost five crore subscribers of the Employees' Provident Fund Organisation (EPFO). The decision, taken by the EPFO in March this year, brings the rate of interest on PF deposits to a more than four-decade low.
According to an official order of the retirement fund body, the Ministry of Labour and Employment conveyed the approval of the central government to credit 8.1 per cent rate of interest, instead of 8.5 per cent provided in 2020-21. The Union labour ministry had sent the proposal to the ministry of finance.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.Prior to this, the lowest rate of interest prior to this was in 1977-78, when it stood at 8 per cent.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 same rate of interest was provided to its subscribers in 2016-17, while it was 8.55 per cent in 2017-18.The EPF interest rate provided for 2019-20 was the lowest since 2012-13, when it was brought down to 8.5 per cent.