Employee Provident Fund and Interest Rates

The best part about the employee provident fund is that the rate of return on EPF is much higher than the regular saving schemes or any other risk-free investments. This is the reason why many people make a voluntary contribution towards EPF. These funds can be really useful during the child’s marriage or during the purchase of a new house.

EPFO holds a meeting at a regular interval so as to review the policies and the interest rate that it offers. This helps them in ensuring that they are able to provide returns to the people who have their funds parked with them. There are two major decisions which were taken at the last EPFO review meeting and here are the details of the same.

  • Interest Rates – The interest rate for 2016-2017 financial year was 8.65% and this was quite high considering the benchmark of the debt funds available in the market. The interest rate for the next year has been reduced by 10 basis points hence the new interest rate for the investments in EPF is 8.55%. Even after the reduction in interest rate, the EPF remains to be an attractive option for the investments.
  • Contribution % for Women – Second major decision taken by the EPFO was about the mandatory contribution percentage for the women employee. Until now, it was mandatory for all the employee to contribute 12% of their basic salary towards EPF but after the review, the EPFO has given a relaxation of 4% to the first time women employee. This means that the women can now contribute 8% of basic to the EPF and hence their take-home salary will increase.

These were the two major updates and you must check the news from time to time to stay updated about the EPFO and their policies.