New Delhi, Mar 12 : The Central Board of Trustees, the apex decision making body of Employees Provident Fund Organisation (EPFO) has recommended 8.1 per cent rate of interest to its subscribers for 2021-22, a move seen as a set back for millions of middle-class Indians. “The Central Board recommended 8.10 per cent annual rate of interest to be credited on EPF accumulations in members’ accounts for the financial year 2021-22,” Ministry of Labour and Employment said in a statement on Saturday. The interest rate would be officially notified in the government gazette following which EPFO would credit the rate of interest into its subscribers’ accounts, it said. The decision was taken at the 230th meeting of Central Board of Trustees, EPF held today during the AKAM Iconic Week in Guwahati under the Chairmanship of Bhupendra Yadav, on Minister for Labour and Employment and Environment, Forest and Climate Change. Provident fund has been one of the most lucrative and safe forms of investment, especially for millions of middle-class people as well as the pensioners given the higher rate of interest, as compared to banks’ savings or fixed deposit rates. However, the downward revision of the rates, will not go down well with these EPFO subscribers. The EPFO had kept the interest rate steady at 8.5 per cent for 2020-21, after revising it in 2019-20. The downward revision of the rates for 2021-22 at 8.1 per cent is, however, the lowest in years. “EPFO despite following a conservative approach towards investment, has consistently generated high returns over the last many years which has enabled it to distribute higher interest to its subscribers, through various economic cycles with minimal credit risk,” it said. Traditionally, EPFO has been able to give a higher rate of interest on retirement savings in comparison to other available investment options because of its prudent investment policy of investing in long tenor high yielding securities for the past several decades. “This has ensured that the returns on EPFO’s investments are higher even when the yields have been steadily coming down in the past decade,” the ministry said. For FY 2022, EPFO decided to liquidate some of its investment in equities and the interest rate recommended is a result of combined income from interest received from debt investment as well as income realized from equity investment. “This enabled EPFO to provide a higher return to its subscribers and still allowed EPFO with a surplus to act as a cushion for providing a higher return in the future also. There is no over-drawl on the EPFO corpus due to this income distribution,” it said. The assured fixed return approach of EPFO, announced by CBT every year along with the tax exemptions makes an attractive savings option for the PF members. According to the data provided by the ministry in February, EPFO had added 14.60 lakh net subscribers during December 2021. Of the total 14.60 lakh net subscribers added, 9.11 lakh were new members who had enrolled under EPF & MP Act, 1952, for the first time. EPFO provides provident fund, pension benefits to the members on their retirement and family pension and insurance benefits to their families in case of untimely death of the member. PSK SHK1820