Finance Ministry lowers proposed PF interest rate to 8.7% for the first time

Even though the Central Board of Trustees (CBT) of retirement body EPFO had decided on an 8.8% interest rate, the Finance Ministry has lowered it and approved an 8.7% interest on PF deposits for over 5 crore subscribers.

"The (EPFO's apex decision-making body) CBT, at its meeting held in February 2016, has proposed an interim rate of interest at 8.8 per cent to be credited to the accounts of Employees' Provident Fund subscribers for 2015-16. The Ministry of Finance has, however, ratified an interest rate of 8.7 per cent," Labour Minister Bandaru Dattatreya said in a written reply to the Lok Sabha today.

This is probably the first time that such thing has happened, when the Finance Ministry has not agreed to the CBT’s rate of interest.

Earlier, EPFO had provided 8.75% rate of interest in 2013-14 and 2014-15, 8.5% in 2012-13 and 8.25% in 2011-12.

As per EPFO's estimates worked out in September, it can easily pay 8.95% rate of interest, leaving a surplus of Rs 100 crore.

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