EPFO Interest Rates are Lowest in 8 Years, Here’s a Look at How They’ve Changed Over the Years
EPFO Interest Rates are Lowest in 8 Years, Here’s a Look at How They’ve Changed Over the Years
The betas were lowered by 15 basis points (bps) from 8.65 per cent provided during 2018-19. The latest cut has made the interest rates on provident fund deposits the lowest in at least eight years.

In a move that will affect nearly six crore people, the Central Board of Trustees, which is the top decision-making body of the Employees’ Provident Fund Organisation (EPFO), decided on an interest rate of 8.5 per cent on provident fund deposits for the current financial year.

The betas were lowered by 15 basis points (bps) from 8.65 per cent provided during 2018-19. The latest cut has made the interest rates on provident fund deposits the lowest in at least eight years.

The labour ministry will now require the finance ministry's concurrence on the proposal.

EPF interest rates were 8.25 per cent in the year 2011-12 which were raised to 8.5 per cent in 2012-13 and 8.75 per cent in 2013-14 and 2014-15. The rates were further increased to 8.8 per cent for FY 2015-16.

In 2016-17, the rates were cut to 8.65 per cent and further to 8.55 per cent in 2017-18 before being adjusted again to 8.65 per cent in the previous fiscal.

In 2011-12, EPF interest rates had seen one of the sharpest cut ever of 1.25 percentage points of 125 bps from 9.5 per cent in 2010-11 to 8.25 per cent. To be sure, the rates had also witnessed an equally sharp hike of 100 bps over the 2009-10 figure of 8.5 per cent.

Data shows that changes in interest rates on provident fund deposits have become more frequent over the past decade, a phenomenon which existed in the 70s and 80s.

Between the 90s and early 2000s, EPF interest rates used to remain the same for a number of years before witnessing any change whatsoever.

For instance, EPF interest rates were hiked from 11.8 per cent in 1988-89 to 12 per cent — the highest rate ever provided by the EPFO — in 1989-90, which remained so till the year 1999-00. It was cut to 11 per cent only in 2000-01 and again to 9.5 per cent in 2001-02.

The rates remained at 9.5 per cent for four financial years and were cut to 8.5 per cent in 2005-06. This rate (8.5 per cent) continued till 2009-10.

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