Press Information Bureau

Government of India

Ministry of Finance

04-May-2012 17:05 IST

Linking of GPF Interest Rates With EPFO

The rates of interest on General Provident Fund (GPF) is 8% for the period from 1.4.2011 to 30.11.2011 and 8.6% from 1.12.2011 to 31.3.2012, whereas the rate of interest on EPF for the financial year 2011-12 is 8.25%. Rate of interest on EPF is fixed on the recommendation of the Central Board of Trustees (CBT) by the Employees Provident Fund Organisation (EPFO), Ministry of Labour and Employment based on the income earned on the accumulated fund during the financial year. However, rate of interest on GPF is generally fixed after taking into consideration the average secondary market yields on government securities of similar maturity.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

SS/SL

GPF and EPF interest rate setting use distinct mechanisms, altering benchmark basis for provident fund interest. Interest rate setting for the employee-managed provident fund is fixed by trustees based on income earned on the accumulated fund during the financial year, while General Provident Fund rates are generally fixed by reference to average secondary market yields on government securities of comparable maturity; these differing benchmarks explain periodic rate differentials.