In the meeting of the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organization, a big decision has been taken regarding the interest rate. The decision has dealt a severe blow to the employees. The Indian Express was informed by two members of the board that for the financial year 2021-22, 8.10 percent interest rate has been recommended for PF account holders, which is said to be the lowest in four decades.
At the same time, the EPFO board had finalized the recommendation of 8.5 percent interest rate for the last financial year 2020-21 in March last year. However, earlier EPFO had kept the interest rate on PF deposits at 8.5 per cent without change for 2020-21 and the same in 2019-20, despite substantial withdrawals in view of the impact of COVID on people’s financial resources.
The Employees’ Provident Fund Organization had high withdrawals and low contributions after the COVID-19 pandemic. Till December 31, EPFO had settled 56.79 lakh claims amounting to Rs 14,310.21 crore provided under the advance facility.
At the same time, in the last few years, there is pressure from the Finance Ministry to reduce the interest rate of EPFO and it is being said to bring the interest rate below 8 percent. Apart from this, the Finance Ministry had raised questions on the interest rate for 2019-20 and 8.65 per cent for 2018-19 for IL&FS and similar risky entities.
However, even after the fall, the interest rate of PF remains higher than other savings accounts. Savings schemes give returns of only 4 to 7.6 percent. Explain that the recommendation of interest rate is taken in the CBT meeting with the representatives of employers and employees, chaired by the Union Labor Minister. After this it is finalized by the Ministry of Finance.