The Employees’ Provident Fund Organisation (EPFO) traditionally announces the annual interest rate applicable on EPF deposits during the last quarter of the financial year. This year, in February, the EPFO declared a marginal increase in the interest rate to 8.25% for deposits held during the financial year 2023-24. However, historical trends suggest that this interest may not be credited before the end of the financial year on March 31, 2024.
According to an expert the delay in crediting interest is often attributed to procedural delays within the labour ministry, including the process of forwarding required documents to the finance ministry.
While this delay may raise concerns about potential loss of interest earnings, another expert assures that as per the EPF Scheme, interest is calculated on a monthly basis, even if credited annually. Therefore, subscribers do not suffer any loss due to delays in interest crediting.
EPFO has reiterated this stance, assuring subscribers that any delayed interest will be accumulated and paid in full. This assurance was reiterated on social media, with EPFO’s handle reassuring members about the absence of interest loss due to delays.
The EPFO employs a compound interest accounting method, ensuring that earned interest is calculated based on monthly running balances. Therefore, delayed interest payments do not impact subscribers’ interest earnings for the new financial year.
Even in cases of withdrawals before interest crediting, EPF members are not subjected to interest loss. The withdrawal process ensures that interest due until the withdrawal date is credited subsequently to the member’s account.
In summary, EPFO’s procedures safeguard against any loss of interest for subscribers, even in cases of delayed interest crediting or withdrawals before interest is credited.
