Over six crore account holders of Employee Provident Fund Organisation (EPFO) will get interest amount at 8.65 per cent credited to their account ahead of the festival season, Labour Minister Santosh Gangwar said on Tuesday on the sidelines of an event. The interest amount could be credited to accountholders within a few days, the minister said.
In February this year, the Central Board of Trustees, EPF, had recommended crediting of 8.65 % rate of interest on the EPF accumulations in the EPF member’s account for 2018-19. The recommendation was sent to Ministry of Finance for approval, which is yet to come.
Currently, the rate of interest on which Provident Fund withdrawal claims are being is 8.55 per cent interest rate. This rate was approved for FY 2017-18.
How interest rate is credited to PF account
The amount deposited in PF account earns compound interest. It is credited to the account of subscribers on a monthly running balance basis at the rate declared by the EPFO for each year.
Since the February announcement, the government is yet to credit the hiked interest amount to rate to PF account. This has hurt scores of EPF subscribers. If the government had approved the recommendation of the CBT early, lakhs of subscribers would have got more money. On an average, over one lakh subscribers withdraw or settle their EPF account every month. This means, lakhs of investors had to settle
account at a lower interest rate.
The hiked interest amount should have been deposited to the account on March 31, 2019, for FY 2018-19.
As per the EPF rules, an employee contributes 12 per cent of his/her salary towards PM account. A similar amount is contributed by the employer towards PF and Employee Pension Scheme (EPS) in a certain ratio. The employee can voluntarily increase the rate of contribution to above 12 per cent. Of the employer’s contribution, 8.33% is diverted to Pension Fund and the rest 3.67% to EPF.