EPFO slashes interest rate on deposits to 8.50% for FY20; move to affect 6 crore salaried employees
BusinessToday.In March 5, 2020
The Employees' Provident Fund Organisation (EPFO) on Thursday lowered the interest rate on provident fund deposits to 8.50% for FY20 (2019-20) from 8.65% in FY19 (2018-19), Labour Minister Santosh Gangwar said on Thursday.
"The EPFO has decided to provide 8.5 per cent interest rate on EPF deposits for 2019-20 in the Central Board of Trustees (CBT) meeting today," Gangwar told reporters after the meeting in New Delhi.
The decision was taken following a meeting of the central board of trustees of the EPFO comprising representatives of employees, employers and governments both at the centre and some member states
The move will affect the PF deposits of over 6 crore active subscribers.
Now, the labour ministry requires the finance ministry's concurrence on the matter. Since the central government is the guarantor, the finance ministry has to vet the proposal for EPF interest rate to avoid any liability on account of shortfall in the EPFO income for a fiscal.
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.
The EPFO had provided 8.65 per cent rate of interest to its subscribers for 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.