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Government of India approves Rate of Interest for FY 2023

The Central Board of Trustees (CBT) on 10 February 2024 recommended an annual Rate of Interest of 8.25% p.a. for FY 2023-24 to be credited to the account of each member. Pursuant to this, the Government of India on 24 May 2024 has approved a Rate of Interest of 8.25% for FY 2023-24 to be credited to the account of all EPF members except the accounts categorized as inoperative.

Implications for Exempted (in-House) PF Trusts

It is the statutory duty of the Employers who are running their in-house PF Trusts to ensure that the rate of interest declared by such Trusts is either at par or higher than the rate declared by EPFO. It is also an opportunity to analyse the risks and benefits of maintaining a PF Trust. In this context it is pertinent to note that in the recent past, the EPF Authorities are also questioning the maintenance of reserves and surplus by the PF Trusts.

There is a growing trend of surrender of private PF Trusts to EPFO for, inter alia, the following reasons:
1. Investment losses in the recent past (e.g. IL&FS, DHFL etc.)

2. Difficulties in matching the EPFO rate of interest in future

3. Improvements in EPFO functioning

4. Stricter monitoring of PF trusts by PF authorities