Indian Government retains interest rate for General Provident Fund at 8%

Indian Government retains interest rate for General Provident Fund at 8%

The government has retained the interest rate for General Provident Fund (GPF), Contributory Provident Fund and other related schemes at 8% for the first quarter of current financial year. 

The interest rate on these funds was at 8% in January-March quarter of 2018-19 and government kept it unchanged for April to June for 2019-20. 

As per notification by Department of Economic Affairs, the interest rate will be applicable on provident funds of central government employees, railways and defence forces. 

What is a Provident Fund?

A provident fund is a compulsory, government-managed retirement savings scheme used in Singapore, India, and other developing countries.

Workers give a portion of their salaries to the provident fund and employers must contribute on behalf of their employees. The money in the fund is then held and managed by the government, and eventually withdrawn by retirees or, in certain countries, their surviving families.

In India, the Employees' Provident Fund Organisation (EPFO) is a statutory body formed by the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 and is under the administrative control of the Ministry of Labour and Employment, Government of India. The first Provident Fund Act passed in 1925 for regulating the provident funds of some private concerns was limited in scope.