EPFO hikes interest rate on employees' provident fund to 8.15% for 2022-23

Employees Provident Fund (EPF) Interest Rate 2022-23: The retirement fund body Employees’ Provident Fund Organisation (EPFO) has hiked the interest rate on employees' provident fund to 8.15 per cent for 2022-23 from 8.1 per cent a year ago.

In March 2022, EPFO had lowered the interest on EPF for 2021-22 to an over four-decade low of 8.1 per cent for its about five crore subscribers, from 8.5 per cent in 2020-21.

The rate hike decision was taken during the ongoing meeting of EPFO’s Central Board of Trustees (CBT) to discuss the higher salary-linked pension, FY23 interest rates, and annual financial estimates. The CBT is the apex decision-making body of the EPFO and Union labour and employment minister Bhupender Yadav heads the trust.

The EPF rate hike affects around six crore active EPFO subscribers, of these, 72.73 lakh were pensioners in FY22. "The recommended rate of interest of 8.15 per cent will safeguard the surplus as well as will guarantee increased income to members. In fact, the rate of interest at 8.15 per cent and the surplus of 663.91 crores is higher than the last year," EPFO said in an official statement. 

The CBT’s recommendation involves the distribution of more than Rs 90,000 crore in the members’ account on the total principal amount of about Rs 11 lakh crore, which was Rs 77,424.84 crore and Rs 9.56 lakh crore, respectively, in the FY 2021-22.

The total income recommended for being distributed is highest till date, the EPFO said. The growth in income and the principal amount is, respectively, more than 16 per cent and 15 per cent as compared to the last financial year 2021-22.

After the CBT's decision on Tuesday, the interest rate on EPF deposits for 2022-23 will be sent to the Ministry of Finance for concurrence. After the Centre's ratification, the interest rate on EPF for 2022-23 will be credited into accounts of over five crore subscribers of EPFO.

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

The retirement fund body had given 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.

EPFO over the years has been able to distribute higher income to its members, through various economic cycles with minimal credit risk. Considering the credit profile of the EPFO investment, the interest rate of EPFO is higher than other comparable investment avenues available for subscribers.

EPFO has consistently followed a prudent and balanced approach toward investment, putting the highest emphasis on the safety and preservation of principals with an approach of caution and growth.

Earlier, EPFO announced that eligible members can opt and apply jointly with their employers for higher pensions till May 3, 2023, through the unified members' portal of the retirement fund body.

On Monday, the CBT agreed to resolve the issues surrounding the ongoing higher pension matter by implementing the Supreme Court judgment effectively. After the Monday meeting, one of the CBT members told The Indian Express that the plan is to offer clarification on concerns regarding the joint option form for those subscribers who are opting for higher pensions linked to actual salaries following the Supreme Court judgment on this matter. 
“The discussions focused on resolving issues for the forms and officials assured that the SC judgment will be implemented in the truest of spirits,” a CBT member said.

Also read: Should I opt for a higher pension or continue with the same pension from EPFO? What are the points to keep in mind? 

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