Global Economy

PF interest rate set at 8.25% for FY24, the highest in three years; payout to top ₹1 lakh cr


New Delhi: The Employees’ Provident Fund Organisation (EPFO) has fixed 8.25% interest rate on provident fund deposits for 2023-24, the highest in three years, following the approval of its central board of trustees at its meeting on Saturday.

For 2022-23, the retirement fund body offered 8.15% interest, higher than 8.10% in 2021-22.

The interest rate for 2023-24 will be officially notified after approval from the finance ministry, following which EPFO will credit the interest to subscribers’ accounts at the end of the financial year.
“The move is a step towards fulfilling PM Narendra Modi‘s guarantee of strengthening social security for India’s workforce,” said labour and employment minister Bhupender Yadav in a post on social media platform X. The labour minister is the chairman of the central board of trustees of EPFO.

The increase in interest rate by the EPFO comes on the back of strong financial returns earned by the retirement fund body this year, including on its investments in equity, and almost negligible Covid-19 withdrawals, officials said. EPFO’s earnings in 2023-24 stand at ₹13 lakh crore, up 17.97% from ₹11.02 lakh crore in 2022-23, the labour and employment ministry said in a statement.

Total payout of interest for this fiscal is pegged at ₹1,07,000 crore, 17.39% higher than ₹91,151.66 crore in 2022-23, it said.”The total income recommended for distribution has crossed ₹1 lakh crore for the first time. This suggests a healthy financial performance and potentially strong return for its members,” the ministry said.The payout of increased interest rate is expected to leave the retirement fund body with a surplus of ₹278 crore, much lower than ₹663.91 crore in 2022-23. The 8.25% rate, once notified, will be applicable to voluntary provident fund deposits as well. Exempted trusts are also bound to credit the interest at the same rate as EPFO to employees.

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Pension-related Grievances
Besides, EPFO’s central board of trustees, at its 235th board meeting held on Saturday, decided to address pension-related grievances at its next Nidhi Aapke Nikat outreach programme, scheduled for February 27. Employees’ provident fund is a mandatory contribution for salaried employees in organisations with 20 or more workers.

Under the Employees’ Provident Fund & Miscellaneous Provisions Act, employees contribute 12% of their wages to the EPF account on a monthly basis, with a matching contribution by the employer.

While the employees’ full contribution is deposited to the EPF account, only 3.67% of the employer share is deposited to the EPF account and the balance 8.33% goes towards the Employees’ Pension Scheme.

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