EPF interest rate for 2021-22 slashed to 8.1% from 8.5%; lowest in over 40 years

The Employees' Provident Fund Organization (EPFO) on Saturday slashed the interest on provident fund deposits for 2021-22 to more than a four-decade low of 8.1 per cent.

The move comes as a major hit to the earnings of over 60 million subscribers of EPFO. The decision was taken in EPFO's Central Board of Trustees (CBT) meeting, however, it will have to be ratified by the finance ministry before it takes effect.

This is the lowest since 1977-78 when the EPF interest rate was 8 per cent. Since then, it has varied around 8.25 per cent or more. The CBT had last approved an 8.5 per cent interest rate on EPF deposits for 2020-21 in March 2021.

Also Read: EPFO to announce interest rate for 2021-22 in March

It was ratified by the finance ministry in October 2021 and thereafter, EPFO issued directions to field offices to credit the interest income at 8.5 per cent for 2020-21 into the subscribers' account.

"The Employees' Provident Fund Organisation's (EPFO's) apex decision making body Central Board of Trustees has decided to provide 8.1 per cent rate of interest on Employees Provident Fund (EPF) for 2021-22 in its meeting held on Saturday," a source said.

Now, after the CBT decision, the interest rate on EPF deposits for 2021-22 will be sent to the Ministry of Finance for concurrence. EPFO provides the rate of interest only after it is ratified by the government through the finance ministry.

In March 2020, EPFO had lowered the interest rate on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent provided for 2018-19.

Also Read: EPFO: 22.55 crore subscribers credited with interest of 8.50% for FY21

The EPF interest rate provided for 2019-20 was the lowest since 2012-13 when it was brought down to 8.5 per cent.

EPFO had provided an 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18.
The rate of interest was slightly higher at 8.8 per cent in 2015-16

It had given an 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13.
The rate of interest was 8.25 per cent in 2011-12. 

(With inputs from PTI.)