Will EPF interest rate be increased to 10%? Government clarifies
A key question was raised on whether labour unions have demanded a hike in the EPF interest rate to 10 percent.
A fresh discussion on raising the Employees’ Provident Fund (EPF) interest rate to 10 percent has emerged after a question was posed in the Lok Sabha. Minister of State for Labour and Employment Shobha Karandlaje clarified the government’s stand on the issue in a written reply in Parliament.
No union demand for 10 percent EPF rate
A key question was raised on whether labour unions have demanded a hike in the EPF interest rate to 10 percent. On this, the minister said that no representations have been received from labour unions by EPFO specifically seeking enhancement of the EPF interest rate up to ten percent.
Is 10 percent rate feasible?
The minister also addressed the topic of whether EPFO has carried out any financial or actuarial analysis to check if a 10 percent rate is feasible. The minister said that the rate of interest on EPF is recommended by the Central Board of Trustees (CBT), EPF which is a tripartite body comprising representatives of the government, employers and employees.
How EPF interest rates are determined
The government clarified how EPF interest rates are actually calculated by saying that the EPF interest rate declared by EPFO is based on the actual income earned by the Provident Fund corpus from its investments. The government said that since the EPF interest rate is based on the actual income earned by the Provident Fund corpus, it is not comparable with any other variable.
The government also said that as per Paragraph 60(4) of the EPF Scheme, 1952 the Central Government is required to ensure that there is no overdrawal on the Interest Account.