Every Indian earning a salary is aware of the employees provident fund (EPF), which is the most common investment scheme which creates a retirement fund with monthly contributions. This is also mandatory and secures an employee's future by requiring both the worker and the employer to chip in. Following higher returns on investments for FY23, the EPFO is likely to keep the interest rate on the fund close to 8 per cent.
Pandemic-induced withdrawals falling
Reports by the Economic Times suggest that the organisation will either leave the interest rate unchanged at 8.1 per cent or reduce it marginally. The decision will be taken at a meeting of the EPFO, scheduled for March 25 and 26, as withdrawals from PF accounts went down in the post-pandemic era.
Employees can withdraw a percentage of their PF for construction of an additional house, medical expenses, marriage of a daughter or son and one year before retirement. After the covid outbreak, the Indian government had allowed the withdrawal of EPF money for pandemic-induced emergency expenses, followed by another advance in 2021.
Eyeing higher returns
Now that the EPFO is expecting higher returns on equity investments with more funds accumulating in accounts, they are more likely to leave interest rates unchanged. The deadline for those eligible for higher pensions to apply jointly with their employers online, has also been pushed to May 3, 2023.
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