In the midst of inflation, the central government has used scissors on the retirement fund of the salaried people. The government has approved an interest rate of 8.1 percent for the Employees’ Provident Fund (EPF) for the year 2021-22. This is the lowest in 4 decades. This will affect five crore EPFO subscribers. Earlier in March, the Employees’ Provident Fund Organization (EPFO) had decided to reduce the interest rate on Provident Fund deposits from 8.5 percent to 8.1 percent for the financial year 2021-22.
Information given by the Ministry of Labor and Employment
According to the order of the EPFO’s office issued on Friday, the Ministry of Labor and Employment has informed about the approval of the Central Government to credit 8.1 percent interest rate for 2021-22 to every member of the EPF scheme. The Labor Ministry had sent a proposal to the Finance Ministry for consent. After the approval of the government, EPFO will start depositing the fixed interest rate for the financial year in the accounts of the employees.
Interest rate lowest since 1977-78
The 8.1 percent EPF rate of interest is the lowest since 1977-78. At that time it was 8 percent. The Central Board of Trustees (CBT) had fixed an interest rate of 8.5 percent on EPF deposits for 2020-21 in March 2021. It was approved by the Finance Ministry in October 2021. After this, the EPFO had issued instructions to the field offices to credit the interest income in the account of customers at 8.5 percent for 2020-21.
Employees needed money
EPFO’s trustee, K E Raghunathan, representing the employees, said the speed with which the labor and finance ministries have approved the interest rate is indeed appreciable. The employees were in dire need of money and this would help them meet expenses like educational needs of their children. In March 2020, the EPFO reduced the interest rate on provident fund deposits to a seven-year low of 8.5 per cent in 2019-20 from 8.65 per cent in 2018-19. The EPF interest rate for 2019-20 was the lowest since 2012-13, when it was reduced to 8.5 percent.
