Govt. approves Reduced PF Interest Rate at 8.10% for FY 2021-22

Ministry of Labour and Employment, Govt. of India has approved the proposal of CBT (EPFO) regarding PF Interest Rate (FY 2021-22) at reduced rate of 8.10% as compared to 8.50% (FY 2020-21).

Accordingly, EPFO has issued instructions for crediting PF Interest (FY 2021-22) in the respective EPF Member’s Account for their accumulations in the fund in due course.

Govt. approves Reduced PF Interest Rate at 8.10% for FY 2021-22

EPFO Circular No. 4670 dt. 03/06/2022: Govt. approves Reduced PF Interest Rate at 8.10% for FY 2021-22

Declaration of Rate of Interest for the Employees’ Provident Fund Members Account for the year 2021-22

1. The Ministry of Labour and Employment, Government of India, has conveyed the approval of the Central Government, under para 60(1) of Employees’ Provident Fund Scheme, 1952 to credit interest @ 8.10 % for the year 2021-22 to the account of each member of the EPF Scheme as per the provisions under Para 60 of EPF Scheme, 1952.

2. You are, accordingly, requested to issue necessary instructions to all the concerned for crediting the said interest to the members’ accounts.

EPFO recommends Reduced PF Interest Rate at 8.10% for 2021-22

Earlier, the Central Board of Trustees (CBT) of EPFO has recommended to reduce the PF Interest Rate from 8.50% (FY 2020-21) to 8.10% (FY 2021-22) for crediting in the respective EPF Member’s Account for their accumulations in the fund. The amount of interest will be finally calculated/ credited after concurrence/ vetting from the Govt. of India, in due course.

It may be noted that current proposal of PF Interest Rate for FY 2021-22 @ 8.1% is the lowest of the interest paid by EPFO in the past since 1977-78, i.e. @ 8.5% (FY 2019-20 and 2020-21), 8.65% (FY 2018-19), 8.55% (FY 2017-18), 8.65% (FY 2016-17) and so on.

As per the Press Release dt. 12/03/2022 of Ministry of Labour & Employment, GOI, the 230th meeting of Central Board of Trustees (CBT) of EPFO was held at Guwahati, wherein it has been recommended to reduce the PF Interest Rate for the FY 2021-22. CBT has recommended 8.10% annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2021-22. The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into its subscribers’ accounts.

For FY 2021-22, EPFO has decided to liquidate some of its investment in equities and the interest rate recommended is a result of combined income from interest received from debt investments as well as income realized from equity investments. This enabled EPFO to provide a higher return to its subscribers and still allowed EPFO with a surplus to act as a cushion for providing a higher return in the future also. There is no over-drawl on the EPFO corpus due to this income distribution.

Besides, the following key decisions were taken by the CBT in the said meeting:

i) Approval of Revised Estimates for the year 2020-21 and Budget Estimates for the year 2022-23 for schemes administered by EPFO.

ii) Ratification of extension of tenure of External Concurrent Auditor, Custodian, and the tenure of SBI MF & UTI MF as ETF manufacturers till 31/03/2022 or till appointments are made, whichever is earlier.

iii) Ratification of decision to redeem Non-Convertible Debentures (NCDs) of Air India in EPFO’s portfolio. This redemption had helped EPFO realize Rs. 8944.32 Cr. against the face value of Rs 7772.50 Cr.

iv) Approval of Exit Policy and the related Standard Operating Procedure (SOP) for exiting from the downgraded securities.

v) Approval of enhancement of delegation of administrative and financial powers of CPFC for expenditure under the Budget head capital expenditure/ Hiring of office accommodation.

vi) Approval of recommendations of the HR/ establishments Adhoc Committee paving the way for promotion of dying cadres, filling up of vacancies in group B and C cadres in a time bound manner, transfer policy for commissioner’s cadre and training policy and capacity building plan of EPFO. Besides, welfare funds allocated for sports and cultural activities will be enhanced. 5% sports quota vacancies will be filled up with suitable candidates and an objective criteria will be laid down for filling these vacancies.

vi) Approval of the recommendations of the Adhoc committee on coverage and related litigation to ensure universal coverage to all under the social security schemes of EPFO upto the wage ceiling. CBT also agreed to extend social security coverage to gig and platform workers.

vii) Approval of the recommendations of the Adhoc IT and communications to augment the infrastructure, applications, build capacity, carry out business processes engineering and setting up governance apparatus.

viii) Approval of the recommendations of the Adhoc committee on pension reforms to constitute the task force of experts in the field the pension and social security to suggest possible measures to enhance the benefits from the EPS-95.  This task force will include members from PFRDA, LIC, VVGNLI, two independent actuaries, chief investment officers of some reputed investment firms/mutual fund houses, financial or any other expert.

Interest Provisions under Paragraph 60 of the EPF Scheme 1952

(1) The Commissioner shall credit to the account of each member interest at such rate as may be determined by the Central Government in consultation with the Central Board.

(2) (a) Interest shall be credited to the member’s account on monthly running balances basis with effect from the last day in each year in the following manner:-

(i) on the amount at the credit of a member on the last day of the preceding year, less any sums withdrawn during the current year – interest for twelve months;

(ii) on sums withdrawn during the current year – interest from the beginning of the current year upto the last day of the month preceding the month of withdrawal;

(iii) on all the sums credited to the member’s account after the last day of the preceding year – interest from the 1st day of the month succeeding the month of credit to the end of the current year;

(iv) the total amount of interest shall be rounded to the nearest whole rupee (fifty paise counting as the next higher rupee).

(2) (b) In the case of a claim for the refund under paragraph 69 or 70, interest shall be payable up to the end of the month preceding the date on which the final payment is authorised irrespective of the date of receipt of the claim from the claimant concerned:

Provided that interest up to and for the current month shall be payable on the claims which are authorised on or after the 25th day of a particular month along with actual payment after the end of the current month:

Provided further that the rate of interest to be allowed on claims for refund for the broken currency period shall be the rate fixed for the financial year in which the refund is authorised.

Provided also that the rate of interest to be allowed on claims for refund for the broken currency period shall be the last declared rate on Employees’ Provident Fund and if the rate declared for any current year happens to be less than the previous year’s declared rate, then it would accrue as bonus to the outgoing members and it shall be incorporated into calculation for deriving the current year’s rate of interest at the end of the year and the claims settled under this proviso shall be final.

Explanation.- If an establishment is covered for the first time under the Act/ Scheme during the course of the currency period the interest shall be allowed on the sums credited to the member’s account on and from the first day of the month succeeding the month of credit to the end of the current year.

(3) The aggregate amount of interest credited to the accounts of the members shall be debited to “Interest Account”.

(4) In determining the rate of interest, the Central Government shall satisfy itself that there is no overdrawal on the Interest Suspense Account as a result of the debit thereto of the interest credited to the accounts of members.

(5) Interest shall not be credited to the account of a member if he informs the Commissioner in writing that he does not wish to receive it. If, however, the member subsequently asks for interest, it shall be credited to his account with effect from the first day of the period of currency in which he makes a request therefor.

(6) Interest shall not be credited to the account of a member from the date on which it has become Inoperative Account, under the provisions of sub-paragraph (6) of paragraph 72.

HISTORY OF ‘PF INTEREST RATES’ DECLARED BY GOVT./ EPFO ON PROVIDENT FUND ACCUMULATIONS FROM 1952 AND ONWARDS

YEAR PF INTEREST RATE
1952-53 3.00%
1953-54 3.00%
1954-55 3.00%
1955-56 3.50%
1956-57 3.50%
1957-58 3.75%
1958-59 3.75%
1959-60 3.75%
1960-61 3.75%
1961-62 3.75%
1962-63 3.75%
1963-64 4.00%
1964-65 4.25%
1965-66 4.50%
1966-67 4.75%
1967-68 5.00%
1968-69 5.25%
1969-70 5.50%
1970-71 5.70%
1971-72 5.80%
1972-73 6.00%
1973-74 6.00%
1974-75 6.50%
1975-76 7.00%
1976-77 7.50%
1977-78 8.00%
1978-79 8.25% or 8.75% [Note 1]
1979-80 8.25%
1980-81 8.25%
1981-82 8.50%
1982-83 8.75%
1983-84 9.15%
1984-85 9.90%
1985-86 10.15%
1986-87 11.00%
1987-88 11.50%
1988-89 11.80%
1989-90 12.00%
1990-91 12.00%
1991-92 12.00%
1992-93 12.00%
1993-94 12.00%
1994-95 12.00%
1995-96 12.00%
1996-97 12.00%
1997-98 12.00%
1998-99 12.00%
1999-00 12.00%
2000-01 12% & 11% [Note 2]
2001-02 9.50%
2002-03 9.50%
2003-04 9.50%
2004-05 9.5% [Note 3]
2005-06 8.50%
2006-07 8.50%
2007-08 8.50%
2008-09 8.50%
2009-10 8.50%
2010-11 9.50%
2011-12 8.25%
2012-13 8.50%
2013-14 8.75%
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%

Note 1: Interest @ 8.25% plus Bonus @ 0.5% for members who  did not  withdraw  any PF amount during 1976-77 & 1977-78

Note 2: 12% during April- June, 2001 and 11% from July, 2001 and onwards.

Note 3: 9% Interest plus 0.5% Golden Jubilee bonus.

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