The number of new monthly subscribers under the employees' provident fund (EPF) saw a rise of close to 10 per cent to 10.14 million in June, up from 927,703 in May.
The Employees’ Provident Fund Organization (EPFO) will disburse 8.10% interest to its subscribers.
The Central Board has recommended an 8.10% rate of interest to its subscribers for the year 2021-22. The decision was taken in the 230th meeting of the Central Board of Trustees, EPF was held today during the AKAM Iconic Week in Guwahati under the Chairmanship of Bhupendra Yadav, Union Minister for Labour & Employment and Environment.
As per the recommendations of the Central Board, an 8.10% annual rate of interest would be credited on EPF accumulations in members’ accounts for the financial year 2021-22. The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into its subscribers’ accounts.
EPFO has consistently generated high returns over the last several years which has enabled it to distribute higher interest to its subscribers with minimal credit risk.
Traditionally, EPFO has been able to give a higher rate of interest on retirement savings in comparison to other available investment options because of its prudent investment policy of investing in long tenor high yielding securities. This has ensured that the returns on EPFO’s investments are higher even when the yields have been steadily coming down in the past decade.
EPFO has decided to liquidate some of its investment in the equities. The interest rate is a result of combined income from interest received from debt investment as well as income realized from equity investment. This has enabled EPFO to provide a higher return to its subscribers. Even after paying higher interest rates, it would have a surplus which it could use to provide a higher return in the future.
The assured fixed return approach of EPFO, announced by CBT every year along with the tax exemptions makes an attractive savings option for the PF members.