Your EPF deposits will fetch 8.5% for 2020-21. How curiosity is calculated

The Central Board of Trustees of Employees’ Provident Fund Organisation (EPFO) has really useful 8.50% annual charge of curiosity to be credited for EPF subscribers accounts for the monetary yr 2020-21. EPFO has greater than 5 crore lively subscribers. For 2019-20, EPFO had supplied an rate of interest of 8.5% and for 2018-19, 8.65%. The Ministry of Labour mentioned rate of interest can be formally notified within the authorities gazette following which EPFO would credit score the speed of curiosity into the subscribers’ accounts. EPFO had began investing in fairness by way of change traded funds (ETFs) primarily based on the NSE 50 and BSE 30 indices. The funding in fairness belongings began from 5% for FY 2015 and subsequently gone as much as 15% of the incremental portfolio. Both workers and employers collectively contribute 24% of the fundamental wage plus dearness allowance on a month-to-month foundation in the direction of the worker’s provident fund (EPF). How EPF curiosity is calculated: 1) Once the rate of interest for a monetary yr is notified, and the present yr ends, EPFO calculates the month-wise closing steadiness after which the curiosity for the entire yr. It is calculated by including the month-to-month working steadiness and multiplying it with the rate of interest /1200. 2) In case a member is taking a ultimate settlement and the curiosity for the present yr is just not notified, curiosity is credited on the premise of the speed declared for the instantly previous yr. 3) If any sum is withdrawn in the course of the present yr, curiosity from the start of the yr until the final date of the month previous the month by which withdrawal passed off is taken under consideration. 4) No curiosity is calculated on pension contribution since advantages are primarily based on the service size and common wages on the time of exit, whether or not the profit is thru pension or withdrawal profit, says EPFO. Of the employer’s 12% contribution, 8.33% goes in the direction of pension corpus. 4) Interest is individually calculated for the worker share and employer share of provident fund. 5) No curiosity is credited within the members’ account from the date when the account has turn into inoperative. If a member has retired on completion of 55 years of age or has migrated overseas completely or the EPFO member has died and no declare has been obtained for settlement for 36 months from the date when the quantity turned payable, the account turns into inoperative from that date. 6) So EFPO says members who’re leaving service earlier than 55 years of age ought to file claims most by the age of 58 years to not lose any curiosity. Members who’ve retired after 55 years age ought to file declare most inside subsequent three years. In case of demise of a member, the beneficiary ought to file declare most inside 3 years of the date of demise. Subscribe to Mint Newsletters * Enter a legitimate e-mail * Thank you for subscribing to our e-newsletter.