EPFO interest rate was lowered to 8.55 per cent
EPFO or Employees' Provident Fund Organisation today announced an interest rate of 8.55 for the year 2017-18 as compared to 8.65 per cent interest rate given to subscribers in 2016-17, and 8.8 per cent interest offered in 2015-16. Even though the EPFO has lowered the interest rate, the returns from provident fund deposits compare favourably to that of other investment schemes like public provident fund and bank deposits, which fetch lower interest rates. The retirement fund body has nearly 5 crore subscribers.
5 things to know about 8.55% interest rate announced by EPFO
- After the EPFO decides on the interest rate for subscribers, it is has to be then ratified by the finance ministry. Then the interest for the year is credited to the accounts of the subscribers after the end of the financial year. An EPFO subscriber can check the balance in his/her account online or through apps.
- The EPFO had sold a portion of its investments in the exchange traded funds (ETF) worth Rs 2,886 crore earlier this month, a Press Trust of India report said earlier. The retirement fund body has earned a return of Rs 1,054 crore on sale of ETFs this month, the report said. An ETF is a basket of stocks that reflects the composition of an index.
- The EPFO has been investing in stock markets through ETFs since August 2015.
- The employer and employee typically contribute 12 per cent of basic salary towards employee provident fund (EPF) accounts. An employee's 12 per cent contribution goes towards the EPF kitty, while 8.33 per cent out of the total 12 per cent of the employer's contribution is invested in EPS or pension scheme. The balance 3.67 per cent is invested in EPF.
- EPFO, which manages a corpus of over Rs. 10 lakh crore, receives 1 crore claims every year. It has launched many new initiatives for the benefit of subscribers for easing the claim process.