In a major blow to the middle class, the Employees' Provident Fund Organisation's Central Board of Trustees (CBT) has recommended an interest rate of 8.10 per cent for its subscribers for the financial year 2021-22.
In March of last year, the EPFO Board finalised a recommendation for an 8.5 per cent interest rate for the fiscal year 2020-21. The CBT, which is chaired by the Union Labour Minister and includes representatives from both the business and employee sides, determines the interest rate proposal. The Finance Ministry then confirms the recommendation.
Despite significant withdrawals as a result of Covid's impact on people's financial resources, the EPFO kept the interest rate on PF deposits at 8.5 percent for 2020-21, the same as in 2019-20. Following the Covid-19 pandemic, the retirement fund body faced large withdrawals and lesser contributions. The EPFO had cleared 56.79 lakh claims worth Rs 14,310.21 crore under the advance facility as of December 31.
Lowest rate in the last four decades
The interest rate fixed by the EPFO is the lowest since 1977-78 for more than four decades. When the interest rate of EPF was 8 per cent. It is to be noted that the Central Board of Trustees (CBT) had fixed an interest rate of 8.5 per cent on EPF deposits for 2020-21 in March 2021. Here, the interest rates received by the EPFO on deposits in the PF account in the last financial years, then the EPFO had fixed 8.5 per cent interest in the financial year 2020-21 and the previous financial year.
Earlier in 2018-19, 8.65 per cent interest was given on EPFO. EPFO had paid 8.65 per cent interest in 2016-17 and 2017-18 also. At the same time, the interest rate was 8.8 per cent in 2015-16, 8.75 per cent in 2013-14 and 2014-15 also.
