The Central Board of Trustees (CBT) under the Employees’ Provident Fund Organization (EPFO) will hold a meeting on February 28 to decide the interest rate on PF deposits. Recently, the government announced a major income tax rebate in the budget. Given this, there is speculation that the government may also offer a beneficial update on PF deposit interest rates. In this article, we will share all the details regarding this matter.
How is the Interest Rate on PF Deposits Decided?
The interest rate on PF deposits is determined through a multi-step process. First, the Employees’ Provident Fund Organization (EPFO) suggests an interest rate. This recommendation is then sent to the Central Board of Trustees (CBT) for approval. After that, it is forwarded to the Finance Ministry for final approval. Once all approvals are received, the interest rate is officially announced. After the approval process, the interest amount is deposited into the PF subscribers’ accounts. According to media reports, the upcoming meeting may maintain the PF interest rate at around 8.25%.
History of Interest Rates on PF Deposits
- February 2024: EPFO increased the interest rate for FY 2023-24 to 8.25%, the highest in the last three years.
- March 2023: The interest rate for FY 2022-23 was raised to 8.15%, slightly higher than 8.10% in FY 2021-22.
- March 2022: The interest rate for FY 2021-22 was fixed at 8.1%, the lowest since 1977-78 (when it was 8%).
- March 2020: The interest rate for FY 2019-20 was 8.5%, the lowest in seven years. In 2019, it was 8.65%.
The 235th meeting of Central Board of Trustees, EPFO, today has recommended 8.25 per cent as rate of interest on Employees’ Provident Fund deposits for 2023-24.
The move is a step towards fulfilling PM Shri @narendramodi ji’s guarantee of strengthening social security for… pic.twitter.com/z8OzHrdz1P
— Bhupender Yadav (@byadavbjp) February 10, 2024
How EPFO Determines the Interest Rate
EPFO determines the interest rate based on the performance of its investments. It primarily invests provident fund money in bonds and equity instruments to generate returns. The final interest rate is approved after evaluating investment earnings and market trends.
Interest Stabilization Reserve Fund Proposal
The Government of India is considering setting up an Interest Stabilization Reserve Fund under EPFO. This initiative aims to ensure a stable interest rate on PF deposits despite market fluctuations. If implemented, it will benefit more than 6.5 crore PF subscribers.