EPF Interest Rate May Rise To 8.6% for 2012-13

The retirement fund body, Employees’ Provident Fund Organisation (EPFO) may raise interest rate on EPF deposits to 8.6% for this year to benefit about 5 crore subscribers. An official from EPFO said that EPF scheme may soon fetch 8.6% interest from 2012-13 if the Central Board of Trustees (CBT) of the fund agrees to raise the interest rate.

In the month of March, the EPFO had brought down the rate of interest to 8.25% for 2011-12 from 9.5% for 2010-11, which has evoked sharp criticism within and outside the parliament. The EPF scheme was launched by central government on July 1, 1975 to provide better returns to employees of non-government provident funds and other funds. Now, the EPFO has parked about Rs.55,000 crore in the scheme.

The official from the retirement fund body said that due to the low interest rates on Special Deposit Scheme (SDS), it is difficult to maintain rate of interest on EPF above 8.5%. Trade Unions and political parties say that, rates on Public Provident Fund (PPF) and General Provident Fund (GPF), where government employees invest for their retirement, have gone up and therefore the EPF interest rate should also be near these levels.