TLI Staff
New Delhi: If you are a salaried person and a subscriber of Employees’ Provident Fund Organisation (EPFO), you will earn an annual interest of 8.5% on your deposits in FY21.
“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,” said a Labour Ministry statement.
The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into the subscribers’ accounts.
The assured fixed return is announced by Central Board of Trustees every year along with the tax exemptions. This makes it an attractive choice for investors, providing them with strong social security in the form of provident fund, pension and insurance schemes.
Retirement fund manager EPFO has been able to distribute higher income to the subscribers during various economic cycles with minimal credit risk. Considering the high credit profile of the EPFO investment, the interest rate of EPFO is considerably higher than other comparable investments avenues available for subscribers.
EPFO has followed a conservative approach towards investment putting highest emphasis on the safety and preservation of principal first approach. Risk appetite of EPFO has been quite low since it involves investing working class people’s retirement savings.
As per Labour Ministry, EPFO started investing in equity prudently through exchange traded funds based on the NSE 50 and BSE 30 indices in 2015-16. The investment in equity assets started from 5% for FY 2015 and subsequently gone up to 15% of the incremental portfolio.