EPF interest rate increased to 8.8% from 8.7%

The Union finance ministry on Friday agreed to increase interest rate on provident fund deposits to 8.8 per cent for 2015-16 from the 8.7 per cent decided by it earlier.

The Central Board of Trustees (CBT) had decided 8.8 per cent interest rate, however, the finance ministry approved only 8.7 per cent interest on PF deposits citing lower earnings.

Labour minister Bandaru Dattatreya announced the decision to raise interest rate on a day employee unions had called nationwide protests against fixing interest rates lower than 8.8 per cent decided by the retirement fund body EPFO as well as 8.75 per cent paid for the previous fiscal.

“I am happy that finance ministry has agreed to 8.8 per cent for 2015-16,” he told reporters here justifying his ministry’s decision to declare an 8.8% return on EPF savings. Several Central trade unions had strongly protested the finance ministry’s move that would have affected over 5 crore subscribers of retirement body EPFO.

This is the third rollback on EPF in the last two months. Last month the government was forced to withdraw the Budget proposal to tax a certain portion of withdrawals. Subsequently, it withdrew tighter withdrawal norms.