Srinagar, Mar 4 (FN Bureau) The Central Board of Trustees of Employees Provident Fund (EPF) has recommended 8.50 per cent annual rate of interest to be credited on EPF accumulations in members’ accounts for 2020-21. At the 228th meeting of the Central Board of Trustees, held on Thursday here, under the chairmanship of Union Minister of State for Labour and Employment Santosh Kumar Gangwar, it was decided that the interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into the subscribers’ accounts.
There were speculations that the EPFO would lower interest on provident fund deposits for 2020-21 due to withdrawals and lesser contribution by members amid the coronavirus pandemic. In March last year, EPFO had lowered the interest rates on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent in 2018-19.
The EPFO had provided 8.65 per cent interest rate to the 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. Since 2014 EPFO has consistently generated returns not less than 8.50 percent. A high EPF interest rate along with compounding, makes a significant difference to gains of subscribers. This is despite the fact that EPFO has consistently followed a conservative approach towards investment, putting highest emphasis on the safety and preservation of principal first approach.
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, according to an official release. The assured fixed return approach of EPFO, announced by CBT every year along with the tax exemptions makes it an attractive choice for investors, providing them with strong social security in the form of provident fund, pension and insurance schemes.