New Delhi | Jagran Business Desk: The Ministry of Labour and Employment on Thursday announced that the Central Board of Employees' Provident Fund Organisation (EPFO) will maintain an interest rate of 8.50 per cent for its subscribers for the financial year 2020-21.

"Since FY14, EPFO has consistently generated returns of over 8.5 per cent. A high EPF interest rate along with compounding makes a significant difference to gains of subscribers," the Labour Ministry said in a statement.

"This is despite the fact that EPFO has consistently followed a conservative approach towards investment, putting highest emphasis on the safety and preservation of principal first approach. Risk appetite of EPFO is very low since it involves investing poor man's retirement savings also," it added.

The decision to keep the interest rate unchanged was taken at a meeting of EPFO's central board of trustees in Srinagar on Thursday. It was speculated that EPFO would lower interest for this financial year from 8.5 per cent due to more withdrawals and lesser contribution by members amid the COVID-19 crisis.

The central government had reduced the interest rate on provident fund deposits in March last year to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent in 2018-19.

"We know that circumstances in 2020 weren't favourable for us. People were surprised when in 2020 beginning, we had said that we'll try to give 8.5 per cent interest on Provident Fund amount for the year 2019-2020," Union Labour Minister had said earlier.

The EPFO had provided 8.65 per cent interest rate to its subscribers in 2016-17 and 8.55 per cent in 2017-18. The rate of interest was slightly higher at 8.8 per cent in 2015-16.

It had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13. The EPFO had provided 8.25 per cent rate of interest on provident fund in 2011-12.

(With inputs from agencies)

Posted By: Aalok Sensharma