In a major hit to the earnings of over sixty million subscribers of the Employees Provident Fund Organisation, the central board of trustees of EPFO have approved 8.10% as the rate of interest on PF deposits for 2021-22, lowest in more than four decades.
EPFO had credited 8.0% as interest rate in 1977-78. Since then, it has been either 8.25% or more.
The retirement fund body had credited 8.5% in 2019-20 and 2020-21 while it was 8.65% in 2018-19, 8.55% in 2017-18, 8.65% in 2016-17 and 8.8% in 2015-16.
The decision was taken after much resistance from the trade unions at the EPFO’s board meeting in Guwahati on Saturday. The central board of trustees of EPFO or CBT is a tripartite body involving government, workers and employers’ representatives and the decision of CBT is binding on EPFO. It is headed by the labour minister.
However, the finance ministry has to vet the interest rate declared by CBT before it is notified. The interest income gets credited into the subscribers’ account after being notified
Finance ministry has been nudging the labour ministry to lower the interest rate on provident deposits and to bring them at par with other small saving schemes.
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.
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