Interest on EPF balances lowered to 8.65% for 2016-17
You will get 8.65 percent interest on your Employee Provident Fund (EPF) balances for 2016-17, which is 0.15 percent points lower than what your EPF balances earned for 2015-16.
The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) is understood to have arrived at 8.65 percent as the rate of interest payable for 2016-17 at its meeting in Bengaluru on Monday. The CBT is the highest decision making body of the EPFO.
The move is likely to disappoint over 4 crore members of the EPF who would have been looking forward to the CBT suggesting at least retaining the 8.8 percent rate of interest for the year. In fact, Union representatives at CBT had told Moneycontrol during the run-up to its meeting that they might press for an interest rate higher than 8.8 percent for 2016-17.
According to reports, the Finance, Investment and Audit Committee (FAIC) of EPFO has suggested 8.62 percent as the feasible rate of interest for 2016-17. The FAIC arrives at its suggestion of the feasible rate of interest for the consideration of CBT based on analysis of the balance sheet for the year under consideration.
Incidentally, the earlier suggestion by the Finance Ministry to lower the EPF interest rate for 2015-16 by 0.1 percent had met with stiff resistance and had to be eventually rolled back.
The lowering of EPF rate comes in the wake of general lowering interest rates in the system including that of other small savings schemes. The government had in September announced a reduction in the interest rates on small savings schemes by 0.1 percent for the October-December quarter of 2016-17.
Thus, the interest rate on PPF was reduced to 8 percent in the third quarter of the current fiscal as against 8.1 percent in the previous three months period, while the rate on Kisan Vikas Patra was brought down to 7.7 percent from 7.8 percent resulting in KVP now maturing in 112 months instead of 110 months.
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