The Employees Provident Fund Organisation (EPFO) has fixed the interest rate at 8.15% for financial year 2022-23 as per the press release issued on March 28, 2023. The Central Board recommended 8.15 % annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2022-23. The interest rate would be officially notified in the government gazette after approval of Ministry of Finance, following which EPFO would credit the rate of interest into its subscribers’ accounts, stated the press release.
There is a hike in the EPF account interest rate by 0.05%. Last year, the interest rate for EPF account was 8.10% for FY 2021-22.
Do note that once the interest rate is fixed by the Central Board of Trustees (CBT), the finance ministry is supposed to notify it for the interest rate to come into effect. Once the interest rate is notified, only then EPFO will start crediting the interest rate to the EPF accounts. This notified interest rate will be applicable on Voluntary Provident Fund (VPF) deposits as well. Those employees whose EPF accounts is with the exempted trust will also receive this interest rate on their EPF deposits.
As per the press release, “The recommended rate of interest of 8.15% safeguards the surplus as well as guarantees increase income to members. In fact, the rate of interest at 8.15 % and the surplus of 663.91 Crores is higher than the last year.”
The release further said that EPFO over the years 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 EPFO is higher than other comparable investments avenues available for subscribers. EPFO has consistently followed a prudent and balanced approach towards investment, putting highest emphasis on the safety and preservation of principal with an approach of caution and growth.
EPFO being one of the largest social security organization has stayed true to its objective by maintaining and providing its subscribers with the high assured interest rate even during the periods of volatility in equity and capital markets. A blend of conservative yet progressive approach of investment followed by EPFO has made it a wise option for PF members.
The Employees Provident Fund is a mandatory contribution for salaried employees. An employer is also required to make the matching contribution to the EPF account. An employee makes 12% of his wages contribution to the EPF account on monthly basis. The employees full contribution is deposited to the EPF account. In case of employer, only 3,67 percent is deposited to the EPF account. The balance 8.33% goes towards the Employees Pension Scheme (EPS).
The decision on interest rate on EPF deposits for financial year 2022-23 comes at a time when the retirement fund body is still crediting the interest in EPF account for previous financial year i.e., 2021-22.
An employee whose EPF account is managed by the EPFO can check the account balance using following four ways:
a) By using Umang app
b) By visiting EPF member e-sewa portal
c) By giving missed call
d) By sending SMS
If an employee’s account is managed by the exempted trust, then one should ask their employer to provide the EPF statement to know the balance.
If the interest rate is not still reflecting in your EPF account, then one can raise the complaint to the EPFO. The complaint can be raised either by visiting EPF i-gram portal or via Whatsapp. In case of exempted trust under EPFO, one needs to raise the complaint to the employer.
Do note that interest earned on EPF and VPF account will be taxable if the total deposits exceeds Rs 2.5 lakh in a financial year.
The meeting by CBT, EPFO is also crucial as the retirement fund body may seek to simplify the process of applying for higher pension by eligible EPF members. The Supreme Court in its judgement dated November 4, 2022, has allowed one time option to the eligible EPF members opt for higher pension from the EPS. The EPFO has issued circulars on the same on December 29, 2022 and February 20, 2023. However, the documents required are making it difficult for the eligible EPF members to apply for higher pension. Further, the EPFO is yet to issue the circular clarifying the manner in which pension will be calculated for those applying for higher pension.
The EPFO, in its notification in August 2014, removed the option to opt for higher pension if the wages exceed the relevant ceiling. Further, if an employee’s wages at the time of joining the EPF scheme, exceeds the relevant ceiling, then he/she cannot become member of EPS. Currently, if an employee’s basic monthly salary at the time of joining the EPF scheme exceeds Rs 15,000, then he/she cannot become member of pension scheme.
As per news reported in The Economic Times, the government is planning to raise this wage ceiling limit to Rs 21,000 from Rs 15,000 per month currently.