Policy

EPFO keeps interest rate unchanged at 8.5% for FY21

Our Bureau New Delhi | Updated on March 04, 2021

The Central Board of Trustees (CBT) Employees Provident Fund Organisation (EPFO) has recommended 8.5 per cent annual rate of interest to member accounts for 2020-21. A meeting of the CBT held in Srinagar on Thursday decided to send its proposal to the Finance Ministry.

The rate would be officially notified in the government gazette following which the EPFO would credit the interest into the accounts of subscribers, a government release said.

The release added that the EPFO has consistently generated returns of not less than 8.5 per cent since 2014-15. “A high EPF interest rate with compounding makes a significant difference to subscriber gains. This is despite the fact that the EPFO has consistently followed a conservative approach towards investment, laying emphasis on the safety and preservation of principal-first approach. The risk appetite of EPFO is very low, since it involves investing the poor man’s retirement savings also,” the release added.

Virjesh Upadhyay, CBT member and former general secretary, Bharatiya Mazdoor Sangh (BMS) said, a decision was taken to not make changes to the interest rate based on the balance sheet of the EPFO. “Despite a recession worldwide, India’s economy is looking healthy and we did not find any reason to change the interest rate,” Upadhyay said.

Investment in ETFs

The Centre said, from 2015-16, the EPFO prudently started investing in equity through exchange traded funds based on the NSE 50 and BSE 30 indices. “The investment in equity assets started from 5 per cent in FY15 and went up to 15 per cent of the incremental portfolio,” the Labour Ministry said.

Published on March 04, 2021

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