The Provident fund was implemented in 1952 for the employees, and since then it has been sought after saving scheme in the country. But it might get you thinking that what if you could have your contribution as an in-hand salary. And you could use it to invest in various other schemes.
Do the EPF offer an interest rate that would compel you to set others scheme aside and look solely towards it? Do we get any interest on the amount which is deposited in the Provident Fund account? So, in this article, we will have a detailed discussion on the same.
Whenever an individual thinks about a saving scheme or ponders upon a decision to open a new account; He/she always looks into the interest rate of the particular scheme/ account that is subjected. The interest rate is considered as it forms the basis of multiplying your hard-earned money.
So, as an employee, you look for various schemes out there to fulfill the same. Also, it has been made mandatory by the government to pay in a part of your salary towards your provident fund account. This has been drafted by the government of India to look after salaried employees after they retire from the services.
Interest On PF Account Contributions:
The roots of the EPF scheme have been in place since 1952. It has fulfilled the dreams of many individuals and has been trusted by our ancestors for a safe and secure saving scheme that is offering the best interest rate in the market. In the early years of the establishment, EPF offered an interest rate of about 4.2%. This was quite an interest that was being offered at the time post-independence.
Moreover, in the years, 1989-2000 PF offered an interest rate peaked which was about 12.00%. And as the early 2010s arrived, the interest rate of 8.65% plateaued and since then, it has remained to be the same.
There has been some percentage of changes in the interest rate that remains to be around ±. 25% at most. So as of 2019-2020, the EPF interest rate stands to be 8.55%. The interest rate guaranteed by EPF is one of the best in the industry and can not be undermined.
As compared to other savings account, this interest rate is twice as much as the interest offered by other institutions. Moreover, the interest rate that you receive as an individual on Fixed deposits hovers around 6.5%. This itself satisfies and projects the benefits of the EPF scheme in terms of the interest rate.
Also, the other benefits that EPF offers make it the best-in-class investment when an employee draft out his/her retirement plans. For instance, the sum of money that you receive at the maturity of the scheme is completely tax-free.
And the sum of the amount with years of continuous service can even reach 50 lacs or so. Moreover, in times of emergency or in times when you are in need of money for your child’s education, marriage, etc. You can have premature part withdrawal that would be a boon in times of need.
The EPF scheme has been in the game for a long time. If the scheme offered benefits that haven’t served the employees well, then the government would have scraped the same. Moreover, the employees would have protested against the same in the past.
This could have lead to the refusal of contributions from the employee’s side, but there have been no such cases. Also, the interest that it offers has been unmatched in the market, and the belief of the government just adds to its advantages. So, you may go forward and invest your money in EPF.