The government is likely to notify this week the 5-year low 8.55% interest on EPF for 2017-18 as against the interest rate of 8.65% for 2016-17. Now what should you do?
Bad news for salaried people, particularly those who still depend on their EPF corpus for retirement. For, the government is likely to notify this week the 5-year low 8.55% interest on EPF for 2017-18 as against the interest rate of 8.65% for 2016-17, according to a report by PTI.
It may be noted that the rate of interest of 8.55% on EPF for the last fiscal was ratified by the finance ministry. The Central Board of Trustees (CBT), the apex decision making body of the Employees’ Provident Fund Organisation (EPFO), headed by the labour minister, had decided to fix 8.55% interest for 2017-18 in its meeting held on February 21, 2018. However, that couldn’t be implemented for want of the finance ministry’s concurrence and was again delayed owing to the model code of conduct for the May 12 Karnataka polls.
Now lots of salaried persons seem worried in the wake of the EPF interest rate likely to hit the 5-year low and are wondering what to do in the current situation. The problem with most of them is that the EPF contribution is mandatory for them and they can’t do away with it even if they want to do so.
Financial experts say that as for most salaried people EPF is mandatory, there won’t be any escape from it. It’s definitely a good savings fund for retirement, but it may not be enough. A combination of EPF and NPS is a good idea, especially given that NPS withdrawal rules have also been relaxed recently.
“People can opt for PPF accounts as well, although they are not as long term as the former retirement funds. At interval of 15 years, the lump sum can be reinvested into pension funds if desired, giving the investor more flexibility if he/she does not want to be stuck with a scheme like NPS that only matures when one turns 60. Whatever the choice may be, EPF alone should not be the only retirement corpus to depend on. It’s also advisable that the choice of investment for pension should have some tax benefit to give the investor relief all through the tenure,” says Adhil Shetty, CEO, Bankbazaar.com.