The Central Board of Trustees of Employees’ Provident Fund Organisation (EPFO) will pay interest at the rate of 8.50 per cent for the current financial year, 2019-2020, Labour Minister Santosh Gangwar said on Thursday.
“The Central Board of Trustees (CBT) have decided to decrease the rate of Employees’ Provident Fund (EPF),” Gangwar said.
This marks a cut of 15 basis points or 0.15 percentage point -from the interest rate of 8.65 per cent paid on EPF investments for the financial year 2018-19.
The move is likely to impact more than six crore subscribers of the provident fund scheme since EPFO had six crores, active subscribers.
The EPFO had provided 8.65% rate of interest to its subscribers for 2016-17 and 8.55% in 2017-18, the lowest interest rate recorded in five years. The rate of interest was slightly higher at 8.80% in 2015-16.
The retirement fund body had provided 8.75% rate of interest in 2013-14 as well as 2014-15, higher than 8.5% for 2012-13.
Once the approval of the Central Board of Trustees is in place, the proposal is sent to the Ministry of Finance. Only after the clearance of the Finance Ministry that the interest at the new rate is credited in the accounts of subscribers.
Reportedly, the finance ministry has been nudging the labour ministry for aligning the EPF interest rate with other small saving schemes run by the government like the public provident fund and post office saving schemes.