The Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) on Thursday recommended that subscribers be given 8.5% interest rate for PF contributions for 2020-2021, keeping the same rate as the previous year.
At a meeting in Srinagar, the board, chaired by Labour and Employment Minister Santosh Kumar Gangwar, “recommended 8.50% annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2020-21,” a statement by EPFO said.
“The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into the subscribers’ accounts,” it said.
The rate of 8.5% remains the lowest since 2012-2013, however, the EPFO said it was higher compared to other investments.
“EPFO over the years has been able to distribute higher income to its members, through various economic cycles with minimal credit risk. Considering the high credit profile of the EPFO investment, the interest rate of EPFO is considerably higher than other comparable investments avenues available for subscribers,” it said.
The EPFO said it had decided to liquidate investment in equity through exchange traded funds, which it had started in 2015-2016. It added that the interest rate recommended was a result of the income from interest from debt investment and income from equity investment.
“This has enabled EPFO to provide higher return to its subscribers and still allowing EPFO with healthy surplus to act as cushion for providing higher return in future also. There is no over-drawl on EPFO corpus due to this income distribution,” it said.