EPFO sets 8.25% interest rate for employees' provident fund in 2023-24

The Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO) has set the interest rate for Employees’ Provident Fund (EPF) accounts at 8.25% for the fiscal year 2023-24, as reported by news agency PTI. This marks a slight increase from the previous year's rate of 8.15% announced on March 28, 2023. The EPFO, under the leadership of Prime Minister Shri Narendra Modi, aims to strengthen social security for India’s workforce.

The EPF is a mandatory contribution for salaried employees, with both employees and employers making contributions. Employees contribute 12% of their earnings monthly, while employers contribute 3.67% to the EPF account and 8.33% to the Employees Pension Scheme (EPS). Additionally, employers contribute 0.50% towards the Employees’ Deposit Linked Insurance (EDLI) account of the employee.

The EPF interest rate is reviewed annually by the EPFO’s Central Board of Trustees in consultation with the Ministry of Finance. The final interest rate is notified by the Union Finance Ministry after considering the recommended rate.

Interest on EPF accounts is calculated monthly but credited annually on March 31. Last year, the EPFO distributed a net income of Rs 90,497.57 crore, resulting in an estimated surplus of Rs 663.91 crore after crediting interest to members’ accounts.

In July of the previous year, the labour ministry instructed the CBT not to announce the interest rate for 2023-24 without prior approval from the Ministry of Finance. There were earlier reports suggesting an interest rate of around 8% for FY24, given that it was an election year.

Under the leadership of Prime Minister Narendra Modi since 2014, EPF interest rates have varied between 8.80% and 8.10%. Notably, the EPFO provided a 8.65% interest rate to subscribers in 2016-17 and 8.55% in 2017-18, with the rate slightly higher at 8.8% in 2015-16.

In March 2020, the EPFO lowered the interest rate on provident fund deposits to a seven-year low of 8.5% for 2019-20, down from 8.65% provided for 2018-19. The interest rate of 8.5% on EPF deposits for 2020-21 was decided by the CBT in March 2021.