EPFO slashes interest rate on deposits to 8.5% for FY20, to affect 6 crore salaried employees

The Employees' Provident Fund Organisation (EPFO) on Thursday slashed the interest rate on employee provident fund from 8.65% in 2018-19 to 8.5% for 2019-20.

The announcement was made by Labour Minister Santosh Gangwar following a meeting of the central board of trustees of the EPFO.

"The EPFO has decided to provide 8.5% interest rate on EPF deposits for 2019-20 in the Central Board of Trustees (CBT) meeting today," Gangwar told reporters after the meeting in New Delhi.

The minister also informed that the EPFO will have a surplus of over Rs 700 crore following the reduction of interest rate this fiscal.

After the cut, salaried employees will get 15 basis points (bps) lower returns on their provident fund deposits. The move will affect over 6 crore active subscribers.

The  labour ministry now needs the finance ministry's approval on the matter.

Notably, the announced EPF rate is the lowest since 2012-13, when it was 8.5%. In 2017-18, it was 8.55% while in 2016-17, the EPFO provided 8.65% interest rate.