Home Business EPFO sets a three-year high interest rate of 8.25% on employees’ provident fund for 2023-24

EPFO sets a three-year high interest rate of 8.25% on employees’ provident fund for 2023-24

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The Employees’ Provident Fund Organisation (EPFO) has set the interest rate for employees’ provident fund at 8.25 percent for 2023-24, according to sources on February 10, marking a three-year high.

In March 2023, EPFO increased the EPF interest rate marginally to 8.15 percent for 2022-23, up from 8.10 percent in 2021-22. However, in March 2022, it lowered the EPF interest rate for 2021-22 to 8.1 percent, the lowest since 1977-78 when it was 8 percent.

Each month, employees allocate 12% of their earnings to their EPF account, while employers deposit the full amount. Employers contribute 3.67% to the EPF and 8.33% to the Employees Pension Scheme (EPS), and an additional 0.50% towards the Employees’ Deposit Linked Insurance (EDLI) account.

EPF interest rates are reviewed annually by EPFO’s Central Board of Trustees in consultation with the Ministry of Finance. The final interest rate, approved by the Union Finance Ministry, is notified thereafter.

Interest on the Employees’ Provident Fund account is credited annually on March 31, despite monthly calculations. The EPFO calculates the interest rate based on monthly closing balances for the entire fiscal year.

The Procedure

On Saturday, February 10, the EPFO’s highest decision-making body, the Central Board of Trustees (CBT), decided to offer an 8.25 percent interest rate for 2023-24.

A source informed that the CBT has approved an 8.25 percent interest rate on EPF for 2023-24.

This decision will be forwarded to the Ministry of Finance for approval. Once endorsed by the government, the interest rate will be deposited into the accounts of more than six crore EPFO subscribers.

Historical Information

In March 2020, EPFO lowered interest rate on provident fund deposits to 8.5%, the lowest in seven years, compared to 8.65% in 2018-19. Previous rates fluctuated, with 8.65% in 2016-17, 8.55% in 2017-18, and 8.8% in 2015-16.

The retirement fund body offered 8.75% interest rate in 2013-14 and 2014-15, up from 8.5% in 2012-13, with a rate of 8.25% in 2011-12.

Under the leadership of Prime Minister Narendra Modi since 2014, EPF interest rates have fluctuated between 8.80% and 8.10%. Notably, rates were 8.65% in 2016-17, 8.55% in 2017-18, and slightly higher at 8.8% in 2015-16.

In March 2020, EPFO reduced the interest rate on provident fund deposits to a seven-year low of 8.5% for 2019-20, down from 8.65% in 2018-19. The rate remained at 8.5% for 2020-21, as decided by the CBT in March 2021.

Interest rates in recent years:

 2014-15: 8.75%

 2015-16: 8.80%

2016-17: 8.65%

2017-18: 8.55%

 2018-19: 8.65%

2019-20: 8.50%

2020-21: 8.50%

2021-22: 8.10%

2022-23: 8.15%

 2023-24: 8.25%

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