EPF Interest Rate 2016-17
Provident fund subscribers will get lower interest rate on their deposits this year as compared to last year. The provident fund body – the Employees Provident Fund Organisation or EPFO – at a meeting today decided to give 8.65 per cent interest rate for current fiscal year (2016-17). The move will impact over four crore employees who contribute part of their salary towards the provident fund kitty.
The Central Board of Trustees is the apex decision-making body of EPFO
Every month, a salaried individual contributes 12 per cent of his/her salary to the EPF account the employer matches this. A part of the employer’s contribution goes to into Employee Pension Scheme.
Provident fund subscribers had received an 8.8 per cent interest on their deposits last year 2015-16
Interest Rate on EPF is still attractive
Reduction in rate of interest is a setback for 4 crore employees, yet the rate of interest is still very attractive in comparison to rate of interest on bank fixed deposits, National Savings Certificates, government bonds, public provident funds, etc.
Reasons for Low Interest Rate on EPF
The lower interest rate on provident fund deposits comes in the wake of a general decline in interest rate across different financial savings instruments, including bank fixed deposits and small savings schemes. Analysts say that interest rates on fixed deposits are likely to fall further after demonetisation.
The government had earlier this year sharply lowered the interest rate on small savings schemes like Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi Account.
According to the new norms on small savings schemes effective from April 2016, interest rates will be revised every quarter as opposed to earlier norm of annual revision.
The popular Public Provident Fund will fetch an interest rate of 8 per cent for the December quarter. The rate of interest for 5-Year Senior Citizens Savings Scheme and 5-Year National Savings Certificate had been reduced to 8.5 per cent and 8 per cent, respectively.