EPFO reduces interest rate on employee provident fund to 8.5% for FY20

Joseph B. Hash

Retirement fund system Staff Provident Fund Organisation (EPFO) on Thursday lowered the interest rate on deposits to eight.fifty per cent for 2019-twenty from eight.sixty five per cent in 2018-19. The final decision was taken at a assembly of the central board of trustees (CBT) of the EPFO. “EPFO lowers interest […]

Retirement fund system Staff Provident Fund Organisation (EPFO) on Thursday lowered the interest rate on deposits to eight.fifty per cent for 2019-twenty from eight.sixty five per cent in 2018-19. The final decision was taken at a assembly of the central board of trustees (CBT) of the EPFO.

“EPFO lowers interest rate on worker provident fund to eight.fifty per cent for 2019-twenty from eight.sixty five per cent in 2018-19,” explained Labour Minister Santosh Gangwar soon after the assembly.

Now, the labour ministry involves the finance ministry’s concurrence on the subject. Given that the Govt of India is the guarantor, the finance ministry has to vet the proposal for the EPF interest rate to avoid any liability on account of a shortfall in the EPFO earnings for any financial year.

The move usually means that salaried personnel would receive reduced returns for the financial year ending March 31, 2020. The EPFO was presenting subscribers an interest of eight.sixty five per cent in 2018-19. It had furnished eight.sixty five per cent rate of interest for 2016-17 and eight.55 per cent in 2017-18. The rate of interest in 2015-16 was a little better at eight.eight per cent.


The finance ministry has been nudging the labour ministry to align the EPF interest rate with other smaller preserving strategies operate by the govt, this kind of as the general public provident fund and article business preserving strategies.

The EPFO invests eighty five per cent of its yearly accruals in the personal debt industry and 15 per cent in equities through trade-traded cash.

At the conclude of March last year, the EPFO had a cumulative investment of Rs 74,324 crore in equities, fetching a return of fourteen.74 per cent.

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