EPF interest rate hiked to 8.65%; to benefit 6 crore provident fund subscribers
New Delhi, Apr 27: Union finance ministry has approved the hike of the Employees Provident Fund (EPF) interest rate to 8.65% as approved by retirement fund manager EPFO, benefitting more than 6 crore formal sector workers.
Confirming the development to PTI, a labour ministry official on the condition of anonymity, said, "The Department of Financial Services has accepted the EPFO rate hike and given its concurrence for a higher interest payout." Although the FinMin approval is a procedural formality, it is needed before interest rates are passed on to 60 million EPFO subscribers.
"The DFS has approved the proposal subject to fulfilment of certain conditions related to efficient management of the retirement fund," the source said further.
Earlier in February, the EPFO's apex decision making body Central Board of Trustees headed by Labour Minister Santosh Gangwar had decided to raise the interest rate on EPF to 8.65% for 2018-19, which was the first increase in the past three years.
The EPFO had earlier reduced the interest rate in 2016-17 to 8.65% from 8.8% in 2015-16.
According to the EPFO estimates, there would be a surplus of Rs 151.67 crore after providing 8.65 per cent rate of interest for 2018-19 on EPF. There would have been a deficit of Rs 158 crore on providing 8.7 per cent rate of interest in EPF for last fiscal. That is why the body decided to provide 8.65 per cent rate of interest for 2018-19.
The EPFO had provided a five-year low interest rate of 8.55 per cent to its subscribers for 2017-18.