The government has cut the interest rate on employees’ provident fund (EPF) savings for 2011-12 to 8.25%, leaving many salaried mployees with lower returns on their retirement savings this year compared with bank fixed deposits and other small savings instruments.
In 2010-11, the EPF rate was raised to 9.5% from 8.5%.
The finance ministry has taken the view that the reserves were not enough and that there is no option but to finalise a conservative rate of return for this year.
The EPF rate for this year is lower than the 8.6% payable on PPF savings from December 1, 2011, and the 8.7% paid on NSCs.
It is pertinent note that Bank fixed deposits are earning over 9.25% currently for long term deposits.
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