Government Proposes hike in Provident Fund Interest Rates
Everyone knows that the Employee Provident Fund or PF is a basic perquisite given to an employee by organisations having PF Registration. It is a perk given over and above the salary, which provides social security benefit after retirement. It also helps in covering risks such as any mishap or emergency.
The Government of India has regularly worked out the provisions under the Labour Laws. recently it had proposed a reduction in the ESI Contribution rate from 6.5 % to 5%, via a draft notification.
Now, the Government has proposed the increase in the interest rates on Provident Fund for 2018-19 to 8.65% as against 8.55% in FY 2017-18.
#1. When did the Government propose the increase in PF interest rate?
The meeting of the Central Board of Trustees of Employees' Provident Fund Organisation (EPFO) was held on 21st February 2019, under the chairmanship of Union Minister of State for Labour and Employment Sh. Santosh Kumar Gangwar. At the meeting, CBT has recommended crediting interest rate on the EPF accumulation in the EPFO members account to 8.65% for the FY 2018-19. This will truly benefit the EPFO members having the PF Registration.
#2. Why did the Government propose a rise in PF interest rate?
The Central Board of Trustees of EPFO has proposed a rise in PF interest rate after taking note of the proposal for a recommendation for the exemption to 6 organisations u/s 17(2) of the Employees' Provident Funds and Miscellaneous Provisions (EPF & MP) Act, 1952.
#3. What will be the benefit of rising in PF interest rate?
The Central Board of Trustees of the EPFO has recommended this hike in the interest rate on Provident Fund for FY 2018-19 after thorough consideration.
- The government has said that once the decision will be approved by the Finance Ministry, it will benefit over 6 crore EPFO subscribers having PF registration.
- Moreover, the EPFO will also have a surplus of ₹151 crore as of now, after increasing the PF interest rates.
#4. Who requires PF registration?
Provident Fund Registration or PF registration is mandatorily required by all organisations that have 20 employees or more.
#5. What are the Benefits of PF registration?
Given below are the Benefits of PF registration:
- Risk coverage: The central aim behind Provident Fund is to cover risks of employees and their dependents that may occur after their retirement, illness or their demise.
- Transferable: Provident Fund account is uniform and transferable. It can be carried forward to other employment places also.
- Employee Deposit Linked Insurance Scheme: Government runs this scheme for all PF holders. Under this, 0.5% of the salary is deducted as the life insurance premium.
- Long-term needs: Several long-term goals such as Marriage or higher education can be easily fulfilled with the accumulated PF amount. And now, a higher PF Interest rate will help more in this regard.
- Pension fund: An equal amount of PF is contributed by the employer. Out of this, 8.33% goes towards the Employee Pension Scheme (EPS).