Provident fund interest rate slashed to a 4 decade low
In a four-decade lowest slash in the Provident Fund interest rates, The Employees Provident Fund Organisation (EPFO) has approved the interest rate on PF deposits to 8.1% for 2021-22 from 8.5%.
The earlier low was in 1977-78 when the rates were 8.0%, since then, it has been either 8.25% or more.
Although the decision was taken in EPFO’s Central Board of Trustees (CBT) meeting, it will have to be ratified by the Finance Ministry before it takes effect.
The interest rate of 8.1% has been declared based on EPFO’s estimated income for the year at Rs.76,768 crore and this will leave the retirement fund body with a surplus of Rs.450 crore.
Labour minister Bhupender Yadav while elaborating on the board’s decision said that the interest rate was finalized after keeping in mind the prevailing international conditions and the market situation.
“We made the recommendation of 8.1 percent interest rate after reviewing the prevailing market situation as well as the international scenario. Also, we cannot take high-risk instruments as we have to keep social security and market stability in mind, and therefore the decision was taken,” Mr. Yadav said after the board’s meeting.
Labour minister tweeted, “Social security has to be kept along with investing in the kind of international situation and the condition of the equity market. We cannot take instruments with very high risk. We are not the people to market that, we are there for the stability of the market, for social security.“
जिस प्रकार की अंतरराष्ट्रीय परिस्थिति और equity बाज़ार की स्थिति बनी है, उसमें निवेश के साथ सामाजिक सुरक्षा को भी रखना है। हम बहुत हाई रिस्क वाले इंस्ट्रुमेंट को नहीं ले सकते है। वो मार्केट करने के लिए हम लोग नहीं है, हम मार्केट की एक स्थायित्व, सामाजिक सुरक्षा के लिए है। pic.twitter.com/b9P6FAEZKn
— Bhupender Yadav (@byadavbjp) March 12, 2022
The move is expected to hit the earnings of over sixty million EPFO subscribers.
The decision was taken during the meeting of the EPFO’s Central Board of Trustees, which was held in Guwahati.
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