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.
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.