Interest Rate on EPF to reduce to 8.25%

December 7, 2011   ·   0 Comments

www.stockssavvy.comGovernment of India is planning to reduce the the interest rate on employee provident fund (EPF) scheme from 9.5% to 8.25%. Employee provident fund organization (EPFO), which takes care of the funds under EPF scheme, is planning to have a meeting on 23rd of Dec 2011 to discuss this matter of reducing interest rates from 9.5% (2010-2011) to 8.25% (2011-2012).

About 6 crore employees could get lower returns on their retirement savings this year, with the government considering a 1.25 percentage point reduction in the Employees’ Provident Fund (EPF) rate, the single largest rate cut in a decade.

The proposed rate cut could prove to be unpopular for an already besieged government as it comes amid rising prices and high interest rates.

The government has from December 1 hiked interest rates on instruments like the Public Provident Fund (PPF) and National Savings Certificates to 8.6% and 8.7%, respectively, in a bid to shore up small savings. We came up with an article few days back on the impact of increase in interest rate of PPF & NSC. Click here to check the article.

The government had kept the interest rate on retirement savings constant at around 8.5% for several years, but raised it last year after it discovered that ‘hidden’ reserves’ of around Rs 1,700 crore had accumulated in provident fund coffers over the years.

 

Year Nominal EPF interest rate
1998-1999

12%

1999-2000

11%

2000-2001

11.25%

2001-2002

9.50%

2002-2003

9.50%

2003-2004

9.50%

2004-2005

9.50%

2005-2006

8.50%

2006-2007

8.50%

2007-2008

8.50%

2008-2009

8.50%

2009-2010

8.50%

2010-2011

9.50%

2011-2012

8.25% (Proposed)

 Let us do a comparison for the the :

Investment Return
Employee Provident  Fund 8.25 %
Public Provident Fund 8.6 %
NSC 8.7 %
Tax saving Fixed Deposit 9.5 %

option with which you will be going this year. Let us know.

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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