Employee Provident Fund (EPF) Rate Dropped by 1.7% Last Year | Expected to Dip Further in 2018

The Employees Provident Fund Organisation (EPFO) to soon lower down the interest rate of EPF for the year 2017-18. Last year, the EPF of 2016-17 was 8.65 percent which was 1.7 percent less than 8.8 percent of the year 2015-16.

Reason behind dipping of EPF interest rates 2017-18

Last year, in 2016-17, the EPF interest rate was 8.65 percent for 4.5 crore employees and now it is expected to drop by maximum 1.5 percent this year. As per the Labour Ministry, the dip in the interest rate of employee provident fund will be made on the basis that the rate of interest will be directly credited into exchange-traded funds (ETF) units of the employees’ provident fund accounts. The cut in the rate of interest of EPF 2017-18 is seen due to the lower income on bonds if the EPF account holder has with him/ her. Though the income projection is still going on for the current financial year by the EPFO which seems to somehow affect the rate of interest of the EPF account holder.

More details on EPF and its dipping rate of interests

The employee provident fund organization in consultation with IIM Bangalore has given a nod on accounting policy for the accounting and valuation of investments done in the equity by the EPF account holder. The accounting policy that EPFO will initiate will help the organization to credit ETFs in the accounts of the EPF account holds on or before March 2018. If this accounting policy by the EPFO gets implemented then all the EPF account holders will be able to to see their EPF along with cash balance and ETFs.

All the dividends on ETFs will be credited to the EPF account of the holder and will be able to realize the interest rate at the time of withdrawal. Apart from this, the EPF account holder can also withdraw money as advances by liquidating ETF units or from the cash balance.

EPFO is a retirement fund body that handles and manages the funds of the retired employees of both public and private sectors. It has also given approval on crediting exchange traded fund (ETF) units to the EPF accounts of all it’s over 4 crore members for which the account holders will have to submit their life certificates to avoid any sort of inconvenience at the time of taking the pension. The submissions of life certificates should be done online only which is hassle free, easy to do and can be done from their home itself.

Source: economictimes.indiatimes.com


Yamini S. Verma

A dreamer and a go-getter, this is how she defines herself. With seven- plus years of experience in Journalism, Yamini has worked with various publications in print and online. With an inclination towards photography, she dreams to go on around the world tour someday and capture the beauty of nature through her lens. You can write to her at hello@chandigarhmetro.com
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