Tuesday, 29 November 2022

EPFO reduce interest rate to 8.1% for 2021-22

EPFO reduce interest rate to 8.1% for 2021-22

The EPFO(Employees’ Provident Fund Organisation ), the state-run retirement fund manager and a popular savings scheme for millions of salaried middle-class Indians, decided on an 8.1% interest on provident fund deposits 2021-22, a downward revision.

In the previous year (2020-21), the fund manager kept the interest rate on savings steady at 8.5%, but Saturday’s downward revision is the lowest in years.

The decision to lower the interest rate, a widely watched working-class savings metric, will not cheer the nearly 60 million active EPFO subscribers. Provident funds are often the only mode to save funds for retirement.

Provident fund savings are mandatory under the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

Virjesh Upadhyay, a board member of EPFO, told.

“In today’s meet, EPFO consensus has been that it will pay an 8.1% interest on deposits based on the current stand of earnings and deposits of the organization,”

Read More: GST council planning to raise 5% tax slab to 8%

According to EPFO rules, at least 12% of an employee’s basic salary is compulsorily deducted to be saved in a provident fund, while an employer co-contributes another 12%.

The Covid pandemic pressured EPFO’s earnings. EPFO delayed payments for 2019-20. This was paid in 2 installments, deriving from 2 sources of EPFO’s investments: 8.15% from debt investments and 0.35% from the equity portfolios.

Press earnings have forced the retirement fund manager to revise the interest rates paid to depositors in some preceding years. For instance, during 2017-18, the organization paid an 8.55% interest rate. In 2016-17, the interest rate was even higher at 8.65%.

According to the labor ministry’s latest provisional payroll data estimates released on January 22, 2022, EPFO added 13.95 lakh net subscribers during November 2021, an increase of 2.85 lakh net additions over the previous month October 2021, with a growth rate of 25.65%.

The January 2022 update, which provided an age-wise comparison of payroll data, shows that the age group of 22-25 years registered the highest net enrolments with 3.64 lakh additions during November 2021.

The Age-group of 18-21 also registered nearly 2.81 lakh net enrolments. The Age-group of 18 to 25 years has contributed around 46.20% of the total net subscriber additions in November 2021.

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