Mumbai: Over 6 crore Employee Provident Fund Organisation ( EPFO) members will get 8.65 per cent interest on their deposits for 2018-19, said Labour Minister Santosh Gangwar on Tuesday ahead of the festival season.
The apex decision-making body of the Employees' Provident Fund Organisation (EPFO), Central Board of Trustees (CBT) had approved 8.65 per cent interest rate for the last fiscal in February this year.
At present, the EPFO is settling Provident Fund (PF) withdrawal claims at 8.55 per cent interest rate, which was approved for 2017-18.
How interest rate is credited to Provident Fund account?
The sum kept in PF account gains compound interest. The amount is credited into the subscribers account on a basis of the month to month running balance as per the rate announced by the EPFO every year.
On an average, over 1 lakh account holders close or withdrew their EPF account each month, because of this lakhs of investors had to close their PF account at a lower interest rate.
The government not yet credited the hiked interest amount in the subscriber's PF account, since February. This has hurt scores of EPF subscribers. Lakhs of account holders would benefit with more money if the government had approved the recommendation of the CBT.
The hiked interest amount should have been deposited to the account on March 31, 2019, for FY 2018-19.
Under EPF scheme, an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employer. The employee gets a lump sum amount including self and employer’s contribution with interest on both, on retirement.
The contribution paid by the employer is 12 per cent of basic wages plus dearness allowance plus retaining allowance. An equal contribution is payable by the employee also. In the case of establishments which employ less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is limited to 10 per cent.
When can EPF be withdrawn:
One may choose to withdraw EPF completely or partially. EPF can be completely withdrawn under any of the following circumstances:
a. When an individual retires from employment:
b. When an individual remains unemployed for a period of 2 months or more. Here, it needs a mention that the fact that the individual is unemployed for more than 2 months has to be certified by a gazetted officer.
c. You can withdraw EPF while switching over from one job to another without remaining unemployed for 2 months or more.
(With agency inputs)