The government has approved 8.1 per cent rate of interest on employees’ provident fund (EPF) deposits for 2021-22 — an over four-decade low — for about five crore subscribers of retirement fund body EPFO.
Earlier in March this year, the Employees’ Provident Fund Organisation (EPFO) had decided to lower the interest on provident fund deposits for 2021-22 to 8.1 per cent from 8.5 per cent provided in 2020-21.
According to an EPFO office order issued on Friday and reviewed by PTI, the Ministry of Labour and Employment has conveyed approval of the central government to credit 8.1 per cent rate of interest for 2021-22 to each member of the EPF scheme.
The labour ministry had sent the proposal to the Ministry of Finance for its concurrence.
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.
The 8.1 per cent EPF rate of interest is the lowest since 1977-78, when it stood at 8 per cent.
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. Thereafter, the EPFO issued directions to field offices to credit the interest income at 8.5 per cent for 2020-21 into the subscribers’ account.
An EPFO trustee, K E Raghunathan, who represents employers, said the speed with which the ministries of labour and finance have cleared the interest rate is really appreciable, considering the dire need of funds in the hands of employees and it will help them meet expenses such as educational needs of their children.