EPFO fixes 8.15% interest on provident fund for FY23

The Employees Pension Fund Organisation (EPFO) on March 28, 2023, fixed 8.15% annual interest on provident fund (PF) amount for the financial year 2022-23 (FY23). The 233^rd meeting of the Central Board of Trustees (CBT) of the EPFO was chaired by Union minister for labour and employment Bhupendra Yadav in New Delhi.

The interest would be officially notified in the government gazette after getting an approval from the finance ministry, following which the EPFO would credit the rate of interest into its subscribers’ accounts.

“The CBT recommended the amount balancing both growth and surplus fund to have safeguards. The recommended rate of interest of 8.15% safeguards the surplus as well as guarantees increased income to members. In fact, the rate of interest at 8.15 % and the surplus of 663.91 crore are higher than the last year,” the ministry said in an official statement.

The board’s recommendation involves the distribution of more than Rs 90,000 crore in the PF members’ account on the total principal amount of about Rs 11 lakh crore, which was Rs 77,424.84 crore and Rs 9.56 lakh crore, respectively, in the FY22. The total income recommended for being distributed is the highest till date.

Growth in income and the principal amount are respectively more than 16% and 15% as compared to last financial year 2021-22.

“The EPFO, which is one of the largest social security organisations in the world, has been able to distribute higher income to its members through various economic cycles with minimal credit risk. Considering the credit profile of the EPFO investment, the interest rate of the EPFO is higher than other comparable investments avenues available for subscribers,” the statement added.

The two previous years had the lowest EPFO returns since 1977-78 ─ the rate of 8.15% for FY23 is the second-lowest since 1977-78 while the rate for FY22 was the lowest at 8.1%. For FY78, the EPFO’s return was 8%. It has since been 8.25% or higher. The peak was 12%, which remained unchanged between FY90 and FY20.

EPFO interest rate chart since 1952

Does delay in interest update in EPF passbook result in money loss?

Updating the member passbook with interest is an entry process, says the EPFO. “The date on which the interest is entered in the passbook of the member has no actual financial bearing as the interest earned for the year on his monthly running balances is always added to the closing balance of that year and it becomes the opening balance for the next year,” it said in a tweet in May, 2023.

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