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The Central government has approved an interest rate of 8.15 per cent to be credited into the accounts of nearly 70 million subscribers of the Employees’ Provident Fund Organisation (EPFO) for Financial Year 2023.
A circular by the Ministry of Labour and Employment, Government of India, has conveyed the approval of the Central government under Para 60(1) of Employees’ Provident Fund Scheme, 1952 to credit interest at 8.15 per cent for the year 2022-23 to the account of each member of the EPF Scheme as per the provisions under Para 60 of EPF Scheme, 1952.
“You are accordingly requested to issue necessary instructions to all concerned for crediting the said interest to the members’ accounts,” it said.
The Central Board of Trustees (CBT) of the EPFO had recommended an interest rate of 8.15 per cent in March this year for FY23. This is marginally higher than 8.1 per cent for the previous year.
“After the 8.15 per cent payout, the retirement fund body will be left with a surplus of Rs 663.91 crore,” Ministry of Labour and Employment had then said.
The EPFO has registered a deficit of around Rs 197 crore in 2021-22 against the estimated surplus of Rs 350-400 crore. This is the second lowest rate in over four decades announced after the 8.1 per cent rate for 2021-22.
It is worth mentioning here that over the years, the Finance Ministry has questioned the high rate retained by EPFO and has been trying to reduce it to a sub-8 per cent level.
EPF is a mandated contribution for salaried employees where an employer is also obligated to make a matching contribution to the account.
On a monthly basis, an employee contributes 12 per cent of his earnings to his EPF account. While in the case of the employer, who also contribute 12 per cent, just 3.67 per cent is deposited into the EPF account, and the remaining 8.33 per cent goes to the Employees Pension Scheme (EPS).