PF Interest Reflects “Today’s Reality”, Says Nirmala Sitharaman: 10 points

PF benefits reflect “today’s reality”, said Nirmala Sitharaman: 10 points

The Employees Provident Fund (EPF) has lowered interest rates to the lowest in over 40 years for the current financial year. The retirement fund body decided to reduce the provident fund (PF) deposit interest for 2021-22 to 8.1 percent for the previous fiscal, 2020-21.

Here is your 10 Item Sheet on the Minister of Finance’s answer:

  1. Finance Minister Nirmala Sitharaman on Monday stressed that the proposed 8.1 per cent interest rate on employee provident funds was determined by current realities.

  2. Ms Sitharaman said the proposed 8.1 per cent interest rate on employee provident funds was better than the interest rates offered by other small savings schemes, and the revision was determined by current realities.

  3. The EPF central board received a call on interest rates on provident fund deposits, and the board has proposed cutting the PF rate to 8.1 per cent for FY2021-22, the finance minister said in his reply to discussions on the Allocation Bill in the Rajya Sabha.

  4. It is a decision taken by the EPF Central Board which has a wide spectrum of representatives in it. The EPF has taken the call to keep the rate at 8.1 per cent, while the rates offered by other schemes including Sukanya Samriddhi Yojana (7.6 per cent), Senior Citizens savings scheme (7.4 per cent) and PPF (7.1 per cent) are much lower. , he said.

  5. “The fact remains this is the prevailing rate today, and it (the EPF interest rate) is still higher than the others,” Ms Sitharaman said, adding that the EPF rate remained unchanged for 40 years and the revision now reflects “today’s reality” .

  6. The Ministry of Finance will now review the interest rates recommended by CBT and issue a notification.

  7. The decision will affect about five crore PF customers. The rate was kept unchanged in 2020-21.

  8. Labor Minister Bhupender Yadav justified the retirement body’s decision by citing the current international and market situation.

  9. The EPF, despite following a conservative approach to investment, has generated consistently high returns over the past few years which has enabled it to distribute higher benefits to its customers, through various economic cycles with minimal credit risk, the Ministry of Labor and Employment said.

  10. In 2019-20, the EPF reduced the PF deposit rate to a seven-year low of 8.5 per cent for 2019-20 from 8.65 per cent provided for 2018-19.


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