EPFO retains 8.5% interest on deposits

NEW DELHI: The Employees’ Provident Fund Organisation (EPFO), the state-run retirement fund manager, on Thursday announced an 8.5% interest on provident fund deposits for 2020-21, keeping a widely watched working-class metric of savings unchanged from last year.

The decision not to lower interest rates is a welcome move for India’s nearly 50 million active EPFO subscribers, for whom provident fund is often the only mode to save up for retirement.

“The EPFO has decided it will pay an 8.5% interest on deposits based on the current position of earnings and deposits of the organisation,” Virjesh Upadhyay,

a board member of the EPFO, told HT soon after the 228th meeting of the EPFO’S central board of trustees (CBT) held in Srinagar on Thursday.

According to prevailing EPFO norms, at least 12% of an employee’s basic salary is compulsorily deducted to be saved in provident fund, while an employer co-contributes another 12%. Subscribers will be paid an 8.5% interest during 2020-21 on these deposits.

In March last year, the retirement fund manager had disappointed subscribers by a downward revision of interest rates on PF deposits to 8.5%, a sevenyear low. KE Raghunathan, an EPFO trustee, said that the EPFO would have a surplus of around ₹300 crore on maintaining 8.5% rate of interest for the current fiscal at par with 2019-20.