Provident Fund Rate Cut To 4-Decade Low, Minister Cites Market Situation

Employees' provident fund interest rate for 2021-22 has been slashed from the existing 8.5 per cent to 8.1 per cent for 2021-22 on Saturday. This is the lowest rate since 1977-78, when it was 8 per cent, labour ministry sources said.

There are around five crore subscribers of employees provident fund organsation (EPFO).

The decision was taken during the meeting of the EPFO's central board of trustees, which was held in Guwahati.

Labour minister Bhupender Yadav while elaborating on the board's decision said that the interest rate was finalised after keeping in mind the prevailing international conditions and the market situation.

"We made the recommendation of 8.1 per cent interest rate after reviewing the prevailing market situation as well as the international scenario. Also we cannot take high risk instruments as we have to keep social security and market stability in mind, and therefore the decision was taken," Mr Yadav said after the board's meeting.

He also tweeted about the decision later. Read his tweet here.

The board's recommendation will be sent to finance ministry soon.

The interest rate was 8.5 per cent in 2020-21.

Once the finance ministry ratifies the board's decision, EPFO will direct its field offices to credit the interest income calculated at the new rate of 8.1 per cent for 2021-22 in the subscribers' accounts.

In March 2020, EPFO had lowered the interest rate on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent provided for 2018-19.

The EPF interest rate provided for 2019-20 was the lowest since 2012-13, when it was brought down to 8.5 per cent.