Retirement fund manager Employees Provident Fund Organisation (EPFO) will take a call on interest rate on employees’ provident fund deposits for 2021-22 in its meeting next month. “The Employees’ Provident Fund Organisation (EPFO) CBT meeting will be held in Guwahati in March where proposal for interest rate for 2021-22 would be listed as it is end of the fiscal year,” Union Labour Minister Bhupender Yadav has told PTI on EPF interest rate for 2021-22.
The decision making body, central board of trustees (CBT) led by the union labour and employment minister is likely to meet in the second week of March – after the state assembly election results are declared – in Guwahati to take a call on the FY22 interest rate. The central board is likely to explore expanding the investment basket in new products as well. in the second week of March – after the state assembly election results are declared – in Guwahati to take a call on the FY22 interest rate. The central board is likely to explore expanding the investment basket in new products as well.
Interest rate
The EPFO Board had in March last year finalised a recommendation of 8.5 per cent interest rate for the previous financial year 2020-21. This rate, the same as last year’s, was the lowest offered by EPFO in eight years.
The Fund had started crediting the interest rate for FY21 for its subscribers. “23.59 crore accounts have been credited with an interest of 8.50 per cent for the FY 2020-21,” it had said in a tweet on December 20. The EPFO has an active subscriber base of more than 6.7 crore and 6.9 lakh contributing establishments.
For FY2021, the EPFO had decided to liquidate investment in equity and the interest rate recommended was a result of combined income from interest received from debt investment as well as income realised from equity investment. The recommendation is then ratified by the Finance Ministry.
Its EPF rate was 8.5 per cent in 2019-20, 8.65 per cent in 2018-19 and 8.55 per cent in 2017-18.
The EPFO invests 85 per cent of its annual accruals in debt and 15 per cent in equities. In debt, a majority – between a minimum of 45 per cent and up to 65 per cent are invested in government securities and related investments.
In equities, currently, the investment is focused on ETFs mimicking the Nifty 50 and Sensex 30 indices and ETFs that aid the government’s disinvestment plan through two fund managers –SBI Funds Management Ltd and UTI Asset Management Company.
The EPFO currently has about 60 million active subscribers and manages funds in excess of Rs 15 lakh crore. EPFO gets an annual deposit of over 1.8 lakh crore.
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