December 20, 2016
On December 19, 2016, the Central Board of Trustees of the Employees Provident Fund Organisation reduced EPF interest rate to 8.65%, the lowest in the last 7 years. The new rate is applicable to PF savings for the current financial year. For the financial year 2015-16, the rate was 8.8%. According to the chairman of the EPF board, Bandaru Dattatreya, the overall economic condition and lower surplus from last year were the main reasons behind this decision to lower rates. The surplus from 2014-15 was Rs.1,604 crore but from 2015-16 it was only Rs.410 crore.
Mr. Dattareya, who is also the Minister of State for Labour (Government of India), estimates that the reduced interest rate of 8.65% will lead to a surplus of around Rs.269 crore for 2016-17. He also said that even after the reduced interest rate, EPF will offer better returns compared other savings schemes such as GPF, post office deposit scheme and Public Provident Fund. This new interest rate will be applied to around 17 crore EPF account holders once the central government accepts the revised rate.
Reduction of EPF rate will affect both private and public sector EPF holders who will need to look for other savings and investments schemes to earn higher returns.