There is some good news on the financial front. The Union Finance Ministry on Thursday said that it has approved the interest rate of 8.25 per cent on provident fund deposits for FY 2024-25. The announcement of these rates was made on 31 May 2024. This was mentioned in the EPFO handle on X, the social networking site.
“Attention EPF Members. The rate of interest for the Financial Year 2023-24 @ 8.25% for EPF members has been notified by the government in May of 2024,” the post read.
The previous year the rate was 8.15 per cent. The increased Employee Provident Fund Organisation (EPFO) will apply to all EPFO members and benefit millions across the country.
The EPFO also clarified that the interest rates for EPFO will not be announced on a quarterly basis. Instead, it would be revealed once a year after the financial year closes, mostly in the first quarter.
In another post on X EPFO said that ‘EPFO has already started settling claims @ 8.25% per annum. The rate of interest is calculated on the basis of income from debt and equity investment of EPFO.’
“Accordingly, 23,04,516 claims have been settled disbursing an amount of Rs. 9260,40,35,488 to the members inclusive of the latest interest rate declared @ 8.25%," it added.
Any employer with an organization that employs 20 people or more has to mandatorily register under the EPF. With a monthly contribution of 12 per cent made by the employee and the same contributed by the employer, the scheme which is valid for the entire work-life of an individual provides a decent corpus on retirement.
For most salaried employees the EPFO deposits are in terms of regular savings and since the employers also contribute it helps one build one’s retirement fund. After the age of 57 one may withdraw 90 per cent one one’s entire EPFO corpus. EPFO also lets a subscriber withdraw a partial amount for reasons like wedding and medical costs subject to certain terms and conditions. However, one needs to understand that EPFO is investing in debt, so one should have the necessary equity exposure over and above it to build the required retirement corpus.
