Boost Your Savings: Government Approves 8.15% PF Interest for 2022-2023
The government has approved a 8.15% interest rate on the Provident Fund (PF) account for the financial year 2022-23. The Employees’ Provident Fund Organization (EPFO) had considered increasing the interest rate by 0.05% in March. This means that if you have a deposit of 1 lakh rupees, you will earn an interest of 8,150 rupees in a year. EPFO announced their decision on July 24th.
Over 6 crore employees in the country contribute to the PF scheme. Under the EPFO Act, 12% of the employee’s basic salary and DA is directed towards the PF account. The company also contributes 12% of the basic salary, out of which 3.67% goes to the PF account and the remaining 8.33% is directed to the pension scheme.
In 1952, the Provident Fund (PF) started with an interest rate of just 3%. Subsequently, it saw gradual increments. In 1972, it reached 6%, and in 1984, it surpassed 10% for the first time. The golden period for PF holders was between 1989 and 1999.
During this period, the PF interest rate was 12%. However, later on, the interest rate saw a decline. From 1999 onwards, the interest rate never came close to 10% again. Since 2001, it has remained below 9.50%, and in the past seven years, it has been at 8.5% or lower.
Understand that currently, your PF account has a total balance of 5 lakh rupees as of March 31, 2023. If the interest rate were 8.10%, you would have earned an interest of 40,500 rupees on 5 lakh rupees. However, with the recent increase in the interest rate to 8.15%, you will now receive an interest of 40,750 rupees.
To determine the interest rate at the end of the financial year, the Finance Investment and Audit Committee holds its first meeting. They assess the accumulated finances during that financial year. Afterward, the Central Board of Trustees (CBT) holds a meeting, and based on their decisions, the Ministry of Finance gives its approval for the applicable interest rate. The final decision on the interest rate is made at the end of the financial year.
