The Employees Provident Fund Organisation (EPFO), which is the most widely used retirement scheme for the common man, has recently decided to cut down its interest rate. As per the latest revision, the interest rate has been slashed from 8.5 percent to 8.1 percent.
Data shows that the revised interest rate of the EPFO is the lowest rate in the last 43 years, and will have an impact on around 60 million subscribers across the country. The last time that the EPFO rate was this low was from 1977 to 1978, when it was 8 percent.
The revision in the rate of the EPFO interest is not expected to go down easy with the subscribers, especially those who rely on their PF accounts for their base retirement fund and hope to accumulate a specific amount till the time their retire.
How will EPFO interest rate revision impact the common man?
Since the interest rate of the EPFO contributions has been lowered, this means that over the entire year, a smaller amount of compensation will be provided to the common man. It must be noted that the revision in amount has only been made for one year.
Depending on one’s income, a revision of 0.4 percent in the interest rate throughout the year could amount to thousands of rupees, amounting to a significant amount, which will not be deposited in their PF accounts due to the new rates.
The pocket of the common man is expected to get lighter due to the revisions in the EPFO interest rate, but since this rate has been fixed for just one year, it is likely that the interest will be raised from next year.
Those who rely heavily on their PF contributions as their retirement plans are expected to take a hit with the new revisions. The new revisions have been announced, and an official notification by the EPFO is expected to be issued anytime soon.
Why has EPFO interest been revised?
The decision to slash the EPFO interest rates was taken during a high-level meeting of the board, which was held in Guwahati. After the meeting, Union Labour minister Bhupender Yadav made the formal announcement of the revisions.
जिस प्रकार की अंतरराष्ट्रीय परिस्थिति और equity बाज़ार की स्थिति बनी है, उसमें निवेश के साथ सामाजिक सुरक्षा को भी रखना है। हम बहुत हाई रिस्क वाले इंस्ट्रुमेंट को नहीं ले सकते है। वो मार्केट करने के लिए हम लोग नहीं है, हम मार्केट की एक स्थायित्व, सामाजिक सुरक्षा के लिए है। pic.twitter.com/b9P6FAEZKn
— Bhupender Yadav (@byadavbjp) March 12, 2022
He said that the slashing of the interest rates of the Provident Fund has been done keeping in mind the current market fluctuations in the midst of the present international conditions.
Yadav said, “We made the recommendation of 8.1 percent interest rate after reviewing the prevailing market situation as well as the international scenario. Also, we cannot take high-risk instruments as we have to keep social security and market stability in mind, and therefore the decision was taken.”
