The Union Finance Ministry has approved the EPFO Central Board of Trustees’ (CBT) decision taken in March to reduce the interest rate on PF accounts to 8.1% from 8.5%.
The interest for 2021-22 would be now be credited to the account holders. The EPFO issued a notification to this effect on Friday. Trade unions and the Opposition had opposed the CBT decision.
“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 the rate of 8.10 % for the year 2021-22 to the account of each member of the EPF Scheme as per the provisions under Para 60 of EPF Scheme, 1952,” EPFO, giving necessary instructions to all the concerned for crediting the interest to the members’ accounts, said in the directive.
K.E. Raghunathan, Member of CBT representing employers, appreciated the speed with which the the Labour and Finance Ministries cleared the interest rate. He said it was important considering the dire needs of funds in the hands of employees and hoped that it would help workers meet expenses such as educational needs of their children.
Workers’ representative in the Board A.K. Padmanabhan said all the trade unions in the CBT had opposed the proposal to reduce the interest rate. “There was widespread criticism against this move of the Centre. Trade unions and Opposition parties had criticised this move,” Mr. Padmanabhan said.
The lowest interest rate the PF accounts had seen was 8% in 1977-78. The Centre had claimed that the decision was taken after looking at various aspects such as the international situation, volatile condition of stock markets and to keep the social security goals.
“We cannot invest in high-risk instruments, we are looking at stable returns for social security needs,” Labour Minister Bhupender Yadav had said in March after the board meeting held in Guwahati. He had argued that the rate was still higher than interest rate on fixed deposits in banks such as the State Bank of India, the Public Provident Fund and such small-saving schemes.