The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) has fixed an interest rate of 8.25% for Employees’ Provident Fund (EPF) accounts for 2023-24, news agency PTI reported on Saturday. Last year on March 28, the EPFO declared an interest rate of 8.15 per cent for Employees’ Provident Fund (EPF) accounts for 2022-23. The EPFO had credited 8.10% in FY22.
“The 235th meeting of Central Board of Trustees, EPFO, today has recommended 8.25 per cent as rate of interest on Employees’ Provident Fund deposits for 2023-24.The move is a step towards fulfilling PM Shri @narendramodi ji’s guarantee of strengthening social security for India’s workforce,” said Bhupender Yadav, Union Cabinet Minister for Labour & Employment.
The Employees Provident Fund is a compulsory contribution for employees who receive a salary. In addition, employers are required to make a corresponding contribution to the EPF account. The state-run retirement fund has over 60 million subscribers.
Also read: EPFO Hikes Interest Rate On Deposits To 8.25% From 8.15%
Every month, employees contribute 12% of their earnings to their EPF account, while the entire amount is deposited into the account. However, employers only deposit 3.67% into the EPF account, with the remaining 8.33% being allocated to the Employees Pension Scheme (EPS). The employer also contributes 0.50% towards Employees’ Deposit Linked Insurance (EDLI) account of the employee.
The Interest rate of EPF is reviewed every year after consultation with the Ministry of Finance by EPFO’s Central Board of Trustees. The Union Finance Ministry notifies the final rate of interest after taking the recommended rate into consideration.
The Employees’ Provident Fund account only receives the interest once a year, on March 31 of the relevant fiscal year, even though it is calculated on a monthly basis. When the EPFO announces the interest rate for a fiscal year and the year comes to an end, the interest rate is calculated based on the monthly closing balance for each month and then for the entire year.
Last year, a net income of Rs 90,497.57 crore was there to be distributed and a surplus of Rs 663.91 crore was estimated after interest credit to the members’ accounts.
Last year in July, the CBT was asked by the labour ministry not to announce the interest rate for 2023-24 without prior approval from the Ministry of Finance.
Earlier it was reported that the Central Board of Trustees (CBT) would approve an interest rate of about 8% for FY24 as it is the election year.
Since the Narendra Modi-led government took charge in 2014, the EPF interest rate has ranged between 8.80% and 8.10%. 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.
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 8.5 per cent interest rate on EPF deposits for 2020-21 was decided by CBT in March 2021.
2014-15 8.75%
2015-16 8.80%
2016-17 8.65%
2017-18 8.55%
2018-19 8.65%
2019-20 8.50%
2020-21 8.50%
2021-22 8.10%
2022-23 8.15%
2023-24 8.25%
