Last time the interest received on PF was cut. The Central Board of Trustees of EPFO can take a big decision in the meeting to be held this month. At present, interest is being received on the amount deposited in PF at the rate of 8.1 percent.
The meeting of the Central Board of Trustees of the Employees’ Provident Fund Organization (EPFO) is going to be held this month. In the meeting, interest rates on the money deposited in Provident Fund (PF) for 2022-23 can be decided. If the news is to be believed, then PF account holders may get a shock, because there is a possibility of reduction in PF interest rates. For the current financial year, the government has fixed an interest rate of 8.1 per cent on PF, which is at the lowest level in 43 years. In 1977-78, the EPFO had fixed an interest rate of 8 per cent. But since then the interest rate has been continuously 8.25 per cent or more.
How much interest can be reduced?
According to media reports, EPFO can retain the current rate of 8.1 percent or reduce it to 8 percent. At present, six and a half crore people are connected with EPFO. Interest rates can be changed considering the possibilities of higher returns in equity investment. EPFO invests the amount deposited in the PF account holder’s account in many places. A part of the earnings from this investment is given to the account holders in the form of interest.
How is the interest rate decided
At present, EPFO invests 85 per cent in debt options. These also include government securities bonds. The remaining 15 percent is invested in ETFs. After this, the interest rate is decided on the basis of earnings from debt and equity. In 2015-16, EPFO started investing in equity, in which it invested 5 per cent of its incremental corpus in the first year, then 10 per cent and later 15 per cent.
According to government data, EPFO has made a cumulative investment of Rs 1.7 lakh crore, of which over Rs 22,000 crore has been paid till March 31, 2022. In general, the EPFO invests an incremental corpus of Rs 1.5 lakh crore in equities in the form of exchange-traded funds (ETFs) on both Nifty and Sensex platforms.
When was EPFO started?
Employees’ Provident Fund Organization (EPFO) was established in the year 1952. Then the interest rate available on PF account was three percent, after that it kept increasing continuously and it reached a high level of 12 percent.
Interest rate since 2015 till now
- 2015-16 8.80%
- 2016-17 8.65%
- 2017-18 8.55%
- 2018-19 8.65%
- 2019-20 8.50%
- 2020-21 8.50%
- 2021-22 8.10%
