The Central Board of Trustees (CBT) of the Employees Provident Fund Office (EPFO) on March 28 set an 8.15 percent interest rate on provident fund for this fiscal.
The decision was taken at the 233rd meeting of the Central Board of Trustees held in Delhi today under the Chairmanship of Bhupendra Yadav, Union Minister for Labour and Employment and Environment, Forest and Climate Change.
The CBT recommended the amount balancing both the growth and surplus fund to have safeguards. The recommended rate of interest of 8.15 percent safeguards the surplus as well as guarantees increased income to members. Both the rate of interest at 8.15 percent and the surplus of Rs 663.91 crore are higher than the last year.
The Board’s recommendation involves distribution of more than Rs 90,000 crore in the members’ accounts on a total principal amount of about Rs 11 lakh crore which was Rs 77,424.84 crore and Rs 9.56 lakh crore, respectively, in FY2021-22. The total income recommended for being distributed is highest till date. The growth in income and the principal amount is more than 16 percent and 15 percent as compared to 2021-22.
Tuesday's CBT decision affects around six crore active EPFO subscribers.
The EPFO had declared an 8.1 percent interest rate for 2021-22, which was the lowest in four decades. The last time the interest rate had slipped to 8 percent was in 1977-78.
The EPF interest rate for FY23 was likely to be around 8 percent. The CBT recommended 8.1 percent for FY22 last March, which was ratified by the finance ministry in June 2022. This left the EPFO with an estimated Rs 450 crore surplus, which had given the indication that the rates would stay within the same range.
In 2022, many subscribers experienced a delay in interest credit. It was also the first year that the Union Budget proposed taxing of interest on higher contributions to EPF.
Read: How EPF changes over the years impact your retirement funds
The CBT was also expected to have a detailed discussion on the higher pension option for subscribers after the Supreme Court order. The EPFO allowed employees to opt for higher pension linked to salaries till May 3. The option was seen as a resolution of two issues — a progressive increase in the number of pensioners and the gap between the net present value (NPV) of contribution and benefits, an Indian Express report said yesterday.