Today’s EPF Interest Rate Hike comes after a slew of tax benefits were announced for the salaried class in Interim Budget 2019.
Employees Provident Fund or EPF is the go-to investment instrument of government employees as well as salaried class working in the private sector. This zero-risk investment scheme also attracts interest rate higher than many savings schemes available in the market. Currently there are approximately 60 million i.e. 6 crore active subscribers of Employees Provident Fund or EPF in India.
EPF is the most promising retirement planning tool in the hands of a salaried employee, who goes on investing a fixed amount every month seamlessly in his/her Employees Provident Fund. The compounding interest further adds to the retirement corpus of EPF subscribers who contribute 12% of the basic salary bolstered by an equal share from the employer too.
Though mostly criticized for reducing liquidity at the disposal of a salaried employee, the EPF comes to rescue in situations wherein an employee wants to meet major life goals like marriage or education or building a house. EPF withdrawal is also allowed for meeting medical emergencies for self or family.
The hike of EPF Interest Rate by 10 basis points brings a positive sentiment to the EPF subscribers, as the EPFO had pegged a five-year-low rate of interest of 8.55% in the year FY 2017-18, by decreasing the then prevalent 8.65% interest rate of FY 2016-17 by 10 basis points.
The recommendation of EPFO will be presented to Central Board of Trustees (CBT) which comprises of Labour Minister and representatives of Employee and Trade Unions, after which approval of Ministry of Finance will be sought to implement this recommendation.
Here’s a look at the past five years Interest Rates of Employees’ Provident Fund
EPF Interest Rate FY 2014-15 – 8.75%
EPF Interest Rate FY 2015-16 – 8.80%
EPF Interest Rate FY 2016-17 – 8.65%
EPF Interest Rate FY 2017-18 – 8.55%
EPF Interest Rate FY 2018-19 – 8.65%