EPF rate of interest for 2020-21 fastened at 8.5%. Key factor to know

The Employees’ Provident Fund Organisation (EPFO) introduced to retain 8.5% price of curiosity on provident fund deposits for the present monetary 12 months 2020-21. “The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into the subscribers’ accounts,” the ministry of labour and employment stated in an announcement. EPFO has greater than 5 crore lively subscribers. “Since FY 2014 EPFO has consistently generated returns not less than 8.50 percent. A high EPF interest rate along with compounding , makes a significant difference to gains of subscribers,” the assertion talked about. 1) There have been speculations that the retirement physique could decrease the rates of interest on provident fund deposits for the fiscal 2020-21 publish the COVID-19 financial downturn all through 2020. However, the retirement physique determined to maintain the rate of interest unchanged. 2) Last 12 months, in March, EPFO had decreased the rate of interest on provident fund deposits to a seven-year low of 8.5% for 2019-20. The board earlier stated it will pay 8.5% curiosity to its subscribers for the 12 months ended 31 March in two installments— 8.15% from debt investments and 0.35% from fairness. 3) The rate of interest was 8.65% in 2018-19. The EPFO had offered 8.55% rate of interest to its subscribers for 2017-18. The rate of interest was 8.65% in 2016-17. 4) “EPFO over the years has been able to distribute higher income to its members, through various economic cycles with minimal credit risk. Considering the high credit profile of the EPFO investment, the interest rate of EPFO is considerably higher than other comparable investments avenues available for subscribers,” the ministry stated. 5) “For FY 2021, EPFO decided to liquidate investment in and the interest rate recommended is a result of combined income from interest received from debt investment as well as income realized from equity investment. This has enabled EPFO to provide higher return to its subscribers and still allowing EPFO with healthy surplus to act as cushion for providing higher return in future also,” the assertion talked about. Subscribe to Mint Newsletters * Enter a sound e-mail * Thank you for subscribing to our publication.