For the first time in about 40 years, the Centre has brought the interest rate of the employees’ provident fund (EPF) down to 8.1 per cent. In the year 2020-21, it was 8.5 per cent. The decision will affect about five crore subscribers of the Employees’ Provident Fund Organisation (EPFO), who will receive 8.1 per cent interest for 2021-22 in their accounts. An order to this effect was issued on 03 June, 2022.
The interest rate has never been this low ever since 1977-78, when it was eight per cent.
In March 2021, the Central Board of Trustees (CBT) had decided the interest rate would be 8.5 per cent, which was approved by the Ministry of Finance about seven months later. This was much lower than the 8.65 per cent interest that was given in 2018-19.
In March 2020, the EPFO had reduced the interest rate on PF deposits to 8.5 per cent, which at that time was the lowest in seven years.
Subscribers are allowed to withdraw non-refundable advance from EPF accounts under specific conditions. They can withdraw up to 75 per cent of the outstanding EPF balance (employees’ share/contribution + interest) or three months’ basic pay along with dearness allowance (DA), whichever is lower.
The non-refundable EPF advance can be claimed for buying a house, plot or flat, or for construction or renovation of house, or for repaying loan, or in case the EPF member is ill or has a family member that has fallen ill. The advance can also be claimed for marriage of self or children or sibling, or for education of children, or during a natural disaster or loss of job and so on.