EPF Rate Hike Update: The reduction in interest rates on social security scheme from EPF borrowers has worked to spoil better retirement planning.
EPF Rate Hike: The Employees Provident Fund Organization has given minor relief to crores of people working in the organized sector. The Central Board of Trustees of EPF has recommended EPF account holders to be given 8.15 percent EPF rate for the financial year 2022-23 on their investments.
In the last year 2021-22, CBT had recommended to give 8.10 percent interest rate. However, this decision of CBT is yet to be approved by the Finance Ministry. Once approved, EPFO will credit the interest amount to the EPF account of its members after gazette notification is issued.
EPF rate fixed at 8.15 percent
The 233rd meeting of the Central Board of Trustees was held under the chairmanship of Labor Minister Bhupendra Yadav, in which a decision has been taken to give this 8.15 percent EPF rate. Giving information about the decision, the Ministry of Labor said in the press release issued that the recommendation of 8.15% by CBT guarantees an increase in income for EPF members with the security of surplus. With the EPF rate being given at 8.15 per cent, the EPFO is left with a surplus of Rs 663.91 crore, which is higher than last year.
Rs 90,000 crore interest amount will be transferred
After this recommendation of the EPFO board, Rs 90,000 crore will be transferred to the subscribers as interest on the total principal of Rs 11 lakh crore of EPFO in the account of EPF account holders. While the principal amount in 2021-22 was Rs 9.56 lakh crore, on which interest of Rs 77,424.84 crore was paid. Compared to the financial year 2021-22, there has been an increase of 16 percent in the principal amount in 2022-23, and 15 percent more interest is being given.
There will be a boom in retirement corpus
The increase in interest rates on EPF will benefit the account holders of EPF and their retirement corpus will boom. Suppose the basic salary of a person is Rs 50,000 per month. And 20 lakh rupees are already deposited in his EPF fund.
So if 8.15 percent interest is given on the deposited fund of Rs 2144000 in his EPF corpus, then in 2022-23 his total fund will increase to Rs 23.21 lakh. That is, by increasing the EPF rate from 8.10 per cent to 8.15 per cent, the fund will increase by Rs 4,000.
Suppose Rs 10 lakh is deposited in the EPF account of an employee. According to the 8.10 percent interest being received on EPF in 2021-22, interest would have been Rs 81,000. But the EPF rate has been increased to 8.15 per cent for 2022-23, so due to the increase in the interest rate, the total interest on the EPF corpus will be Rs 81500. Due to the increase in EPF rate, the account holder will get a benefit of Rs 500.
Rules for contribution to EPF
Let us tell you that in companies with more than 20 employees, it is mandatory for employees earning up to Rs 15,000 per month to open an EPF account. 12% of basic pay and dearness allowance is deducted as employee’s contribution and 12% is deposited by the employer in the employee’s account. In which 8.33 percent is deposited in the Employees Pension Scheme 1995.
