Bhubaneswar: In a good news for over 5 crore active subscribers, The Central Board of Trustees of retirement fund body Employees’ Provident Fund Organisation (EPFO) on Thursday kept the interest rate for the financial year 2020-21 unchanged at 8.5 per cent.
In its 228th meeting, the Central Board recommended 8.50% annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2020-21.
The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into the subscribers’ accounts.
As per an official statement, EPFO has consistently generated returns not less than 8.50 per cent since 2014.
A high EPF interest rate along with compounding , makes a significant difference to gains of subscribers. This is despite the fact that EPFO has consistently followed a conservative approach towards investment, putting highest emphasis on the safety and preservation of principal first approach. Risk appetite of EPFO is very low, since it involves investing poor man’s retirement savings also.
During the period from 2015-16 EPFO prudently started investing in equity through exchange traded funds based on the NSE 50 and BSE 30 indices. The investment in equity assets started from 5 percent for FY 2015 and subsequently gone up to 15 percent of the incremental portfolio, read a PIB release.
For FY 2021, EPFO decided to liquidate investment in and the interest rate recommended is a result of combined income from interest received from debt investment as well as income realized from equity investment. This has enabled EPFO to provide higher return to its subscribers and still allowing EPFO with healthy surplus to act as cushion for providing higher return in future also. There is no over-drawl on EPFO corpus due to this income distribution, the release added.