The 228th meeting of Central Board of Trustees, EPF was held today in Srinagar, Jammu & Kashmir
under the chairmanship of Shri Santosh Kumar Gangwar, Union Minister of State for Labour &
Employment
(Independent Charge),Vice-Chairmanship of Shri Apurva Chandra, Secretary(L&E) and the
Member Secretary Shri Sunil Barthwal, Central P F Commissioner. 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.
Since FY 2014 EPFO has consistently generated returns not less than 8.50 percent. 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.
EPFO over the years has been able to distribute higher income to its members, through 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.
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.
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 assured fixed return approach of EPFO, announced by CBT every year along with the tax
exemptions makes it an attractive choice for investors, providing them with strong social security in the
form of provident fund, pension and insurance schemes.
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