The 228th meeting of the Central Board of Trustees of EPF was held in Srinagar, Jammu and Kashmir today under the chairmanship of the Minister of State (Independent Charge) for Labor and Employment, Shri Santosh Kumar Gangwar.
The meeting was attended by Deputy Chairman Mr. Apoorva Chandra, Secretary (Labor and Employment) and Member Secretary Mr. Sunil Barthwal, Central Provident Commissioner. The Central Board recommended a 8.50 percent annual interest on the accumulated EPF of its customers for FY 2021. The EPFO will deposit the interest rate in the account of the customers after the interest rate is officially notified in the official gazette.
EPFO has consistently given a profit of 8.50 percent since FY14. The high EPF interest rate along with the addition of materialization is of great importance to the customers. Despite the fact that the EPFO has maintained a conservative approach to investment, most of the emphasis has been laid on protecting and preserving the original funds first. The risk appetite of EPFO has been quite low, as it includes the post-retirement savings of the poor man.
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EPFO has been providing more income to its members through various economic cycles with minimal debt risk for many years. Considering the higher loan profile of EPFO investment, the interest rate of EPFO is higher than other available investment opportunities to consumers.
During the period 2015-16, EPFO started investing in equities through the Exchange Trade Fund in the NSE 50 and DSE 30 indices. Five per cent investment in equity commenced in FY15, while later this investment increased to 15 per cent in a slowly growing portfolio.
For FY 2021 the EPFO decided to cease investment and the recommended interest rates are the result of a mix of interest income derived from debt investment and income from equity investment. With this EPFO has been able to give more benefits to its customers and also have secured funds to give more benefits in the future as well. Due to this income distribution, EPFO has never withdrawn more than deposits.
The assured definite benefit of EPFO is announced by the CBT every year along with tax exemption. This gives an attractive choice to the investors. They get strong social security in the form of provident, pension and insurance schemes.
