On Monday, the government approved the interest rate of 8.15 per cent, which was recommended by the Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) for its over 6 crore subscribers for the financial year 2022-23. The EPFO, in a circular issued today, stated that the Ministry of Labour and Employment conveyed the central government’s approval to credit the EPF interest rate into the members’ accounts.
EPFO to Credit 8.15% Interest Rate to Subscribers for FY 2022-23
Following the usual procedure, the Ministry of Labour and Employment had sent the interest rate recommendation to the Ministry of Finance for ratification. With the government’s consent, the EPFO is now set to credit the interest rate for the previous fiscal year to the EPF subscribers.
The circular from the EPFO reads, “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 @ 8.15% 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.”
This approval marks one of the fastest processes for the EPF interest rate by the Finance Ministry. In the previous financial year 2021-22, the central government had approved the interest rate on June 3, but there were delays in crediting the interest to member accounts, leading to complaints from EPF subscribers. The Finance Ministry had clarified that despite the delay, there was no loss of interest rate for EPFO subscribers, attributing the delay to a software upgrade for tax tweaks.
PFO Recommends 8.15% Interest Rate Amidst Surplus Despite Previous Year’s Deficit
In March of this year, the Central Board of Trustees (CBT) of the EPFO had recommended an interest rate of 8.15 per cent for the current financial year 2022-23, slightly higher than the 8.1 per cent of the previous year. After paying out the 8.15 per cent interest rate, the EPFO would still have a surplus of Rs 663.91 crore, as stated by the Ministry of Labour and Employment.
Despite the EPFO registering a deficit of around Rs 197 crore in 2021-22, the interest rate for 2022-23 was increased. The deficit occurred due to several exempted establishments surrendering their exempt status, and the EPFO received 83 cases for surrendering exempt status.
Over the years, the finance ministry has questioned the high interest rate retained by EPFO and has encouraged it to reduce it to a level below 8 per cent. While EPFO rates remain among the highest compared to other savings instruments, small savings rates range from 4.0 per cent to 8.2 per cent.
