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New Delhi: Retirement fund body EPFO on Saturday fixed a three-year high interest rate of 8.25 per cent on employees’ provident fund (EPF) deposits for 2023-24.
In March 2023, the Employees' Provident Fund Organisation (EPFO) had increased the interest rate on EPF marginally to 8.15 per cent for 2022-23 from 8.10 per cent in 2021-22.
In March 2022, EPFO had lowered the interest rate on EPF for 2021-22 to an over four-decade low of 8.1 per cent for its six crore subscribers, from 8.5 per cent in 2020-21.
This was the lowest since 1977-78, when the EPF interest rate stood at 8 per cent.
According to a statement by the Labour Ministry, the decision to hike interest rate for 2023-24 was taken at 235th meeting of Central Board of Trustees (CBT) of EPFO on Saturday, under the chairmanship of Union Labour & Employment Minister Bhupender Yadav.
"The CBT recommended an annual rate of interest of 8.25 per cent to be credited on EPF accumulations in members' accounts for 2023-24. This interest rate will be officially notified in the government gazette after approval by Ministry of Finance. Subsequently, EPFO will credit the approved rate of interest into its subscribers' accounts," it stated.
For FY24, the board recommended distribution of Rs 1,07,000 crore to EPF members' accounts on a total principal amount of Rs 13 lakh crore, which was Rs 91,151.66 crore and Rs 11.02 lakh crore, respectively in 2022-23.
Total income recommended for distribution is the highest on record, it said.
Comparing with the previous financial year, there has been a significant growth, the statement said adding that the income grew by more than 17.39 per cent, while the principal amount increased by 17.97 per cent.
This suggests a healthy financial performance and potentially strong returns for the members, it stated.
EPFO has a strong track record of distributing higher income to its members over the years with prudence.
The interest rate offered by EPFO tends to be higher compared to other investment avenues available to subscribers, it stated.
This indicates confidence in the credit profile of EPFO's investments, as well as its ability to provide attractive returns to its members, it stated.
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.
EPFO had provided 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18. The rate of interest was slightly higher at 8.8 per cent in 2015-16.
The retirement fund body had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13. The rate of interest was 8.25 per cent in 2011-12.