The Employees’ Provident Fund Organisation, or EPFO, on Saturday recommended an interest rate increase to 8.25% from 8.15% for 2023-‘24, reported PTI.
The EPFO, which falls under the purview of the Ministry of Labour and Employment, manages the country’s largest retirement fund with nearly six crore active subscribers.
Provident fund accounts are mandatory for workers earning up to Rs 15,000 a month in companies with more than 20 employees. At least 12% of an employee’s basic salary is compulsorily deducted to be deposited in the provident fund. The employer contributes a matching amount.
The recommendation to hike the interest rate for the employees’ provident fund interest was taken in the Central Board of Trustees meeting held on Saturday, reported The Indian Express.
It will now be sent to the Ministry of Finance for concurrence. After the government’s ratification, the interest rate on the fund for 2023-‘24 will be credited.
If ratified, this will be the highest rate of interest on the provident fund in the last three years. The previous highest level of employees’ provident fund interest rate was at 8.5% in 2019-’20.
This comes after the finance ministry last year asked the EPFO, not to announce its interest rate without approval from financial year 2023-’24.
In its communication to the labour ministry in July, the finance ministry had flagged that the EPFO slipped into a deficit of Rs 197.72 crore against its projected surplus of Rs 449.34 crore for the financial year 2021-’22.
The finance ministry cited the deficit as the reason for making the changes to the interest rate announcement mechanism, The Indian Express had reported citing a communication through a Right to Information application.