PF interest rate slashed to 8.55%

The EPFO on Wednesday decided to slash the interest rates on provident fund (PF) deposits to 8.55% for 2017-18 from the existing 8.65%.

The decision will affect about five crore subscribers once it is approved by the Ministry of Finance.

The decision was taken at a meeting of the Central Board of Trustees, the apex decision-making body of the Employees' Provident Fund Organisation.

The rates have been coming down since 2013-14when the government decided to align  PF  interest rates with small saving schemes such as PPF.

In the year 2015-16, the rates were 8.8%.

As per practice, the finance ministry ratifies the interest rates approved by CBT because the EPFO is an autonomous organisation and provides interest on EPF deposits from its own income.

The decision to slash rates comes after this year's Union Budget proposal made provisions for the government to pay 12% of wages to the EPF contribution on behalf of new employees for initial three years.

The Budget also proposed to amend Employees Provident Fund Act to reduce contribution of women to 8% from 12% with no change in employer's contribution, implying women employees can take home higher amount of salary with the same basic pay structure.