InvestorQ : How can the EPFO afford to hike EPF interest rates?
swati Bakhda made post

How can the EPFO afford to hike EPF interest rates?

Answer
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Nikita Damle answered.
1 year ago


Indian retirement fund body EPFO raised interest rates on Employees Provident Fund (EPF) to 8.65%, from 8.55%, for 2018-19. This is the first time the retirement body has hiked interest rates in the past three years.

However, this doesn’t mean that the higher interest rate has been fixed. This is because this proposal will now go to the Finance Ministry for approval.

Labour Minister Santosh Gangwar who was chairing the meeting said, "All members of the CBT at the meeting here agreed to give a higher interest for subscribers for the current fiscal. The proposal would now go to the Finance Ministry for approval. We will also convince them to provide this rate of interest."

The minister further added that the 8.65 per cent rate of interest for this fiscal on EPF will still leave a surplus of Rs 151.67 crore and that is why the EPFO decided to provide a higher rate this fiscal compared to 2017-18.

A higher rate of interest, say 8.7%, would’ve, however, resulted in a deficit of Rs 158 crore.