New Delhi: The Employees Provident Fund Organization (EPFO) has decided to reduce the interest rate to 8.5 per cent for the current financial year. Union Labor Minister Santosh Gangwar gave the information after the meeting of the Central Board of Trustees (CBT), the apex deciding body of the EPFO.
In the last financial year 2018-19, EPFO paid 8.65 percent interest to its six crore members. The interest rate was decided after considering the EPFO income at the CBT meeting. EPFO pays interest on the income earned by the members on their deposits.
Gangwar told reporters after the meeting that it has been decided in the CBT meeting that EPFO will pay 8.5% interest during the current financial year 2019-20. In this way, the interest income of the members will decrease by 0.15 per cent over the previous year.
After this decision, the Ministry of Labor will have to take the consent of the Finance Ministry. In this case, the central government gives the guarantee, so the Finance Ministry considers the proposal of EPF interest rate to ensure the payment of interest from the EPFO in the financial year itself and does not incur any additional liability on the government.
The Finance Ministry urges the Ministry of Labor to keep the rate of interest of EPF in line with the interest rates payable in Government Savings Schemes like Public Provident Fund (PPF) and Post Office Savings Schemes. The Finance Ministry had objected to raising the interest rate to 8.65 per cent in the last financial year 2018-19 and did not approve for several months. The approval was later granted after the intervention of the Prime Minister’s Office.
The EPFO paid 8.65 per cent interest to its members in 2016-17 and 8.55 per cent in 2017-18. The interest rate was slightly higher at 8.8 per cent in FY 2015-18. The Provident Fund Organization paid 8.75 per cent in 2013-14 and 2014-15 and 8.5 per cent in 2012-13.
