What is the latest Employees Provident Fund (EPF) rate? What are the historical rates for EPF?
This article gives you the current and historical interest rates for EPF so that you can track how the rate has moved since the 1950s.
What is the latest Employees Provident Fund (EPF) rate? What are the historical rates for EPF?
Posted on 05 Jul 2023 • Updated on: 19 Feb 2024
Author: Sayan Sircar
Tags: 
Choosing Investments
4 mins read
Choosing Investments
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This article gives you the current and historical interest rates for EPF so that you can track how the rate has moved since the 1950s.
Originally published: 5-Jul-2023
Updated: 19-Feb-2024 - EPF rate updated to 8.25%
📚 Topics covered:
- What is the Employees’ provident fund (EPF)?
- What is the current EPF rate?
- Historical interest rate and investment limits of EPF
- A few commonly asked questions on EPF investment
What is the Employees’ provident fund (EPF)?
As per the EPFO website, Employees’ provident fund (EPF) is the world’s largest social security scheme offering a provident fund (retirement scheme), pension and death benefits. EPF investment is mandatory with an employer match for most salaried employees.
EPF allows you to save small sums of money, and offers a guaranteed interest rate and tax benefits that make it attractive for many conservative investors. EPF is an excellent debt instrument which has guaranteed return (though it has fallen over time as we show here) but it is still higher than the market rate in other options.
EPF is an EEE-class instrument which means that it is exempt from tax on investment up to 1.5 lakhs/year under 80C, exempt from taxation during growth and there is a full exemption on taxes at maturity. Currently, investments in EPF beyond 2.5L/year leads to taxes on the interest paid above ₹2.5L investment.
What is the current EPF rate?
The latest EPF rate is 8.25%
Historical interest rate and investment limits of EPF
Using data from the EPF India website, we plot the historical interest rates of EPF since 1952.
Some observations:
- EPF rates before the 1980s were below the levels of today
- will EPF rates go lower from the current levels: history shows us that it has been a lot lower, and there is no reason why it cannot go a lot lower
- there was a long period of 15-ish years (1985 to 2000) where interest rates were their highest, i.e. 10-12%. If you have a longing for those rates, do remember the condition of the economy in the same period
- EPF investment is capped at 12% of basic (plus DA) with an equal match from the employer per year
- employees can invest more than this cap per year via the Voluntary Provident Fund (VPF) which has the same interest rate
In the sections below we will cover a few commonly asked questions on EPF.
A few commonly asked questions on EPF investment
Which is better for the long-term - EPF or mutual funds?
Our analysis using SENSEX data from 1979 shows that stock investing in SIP form over a 30-year horizon has given better returns than investing in the EPF.
Read more: EPF vs. mutual funds: which is better?
Should you invest in EPF for your child’s college education?
If your college admission date is 15 years or more away, then a EPF account can be used. However, the returns from EPF are below the usual college fee inflation of 10% (or more), you need equity mutual funds as well to ensure that you meet your goal.
Read more: What is the best way to invest for your child’s college education?
How much should you invest in EPF?
For long-term goals, EPF is a good option. For goals that are more than 15 years away, the typical asset allocation, i.e. mix of equity and debt in the portfolio, should be around 60:40. This means that your monthly investment should also follow the same 60:40 rule. As long as you are investing at least enough in equity as per the asset allocation, the rest can be in EPF and other debt investment options.
Read more: What should be my mix of MF, Stocks, Gold, NPS, FD, EPF and ELSS if I want to invest 50k per month?.
Related Articles
- EPF vs. mutual funds: which is better?
- Should you withdraw from your EPF to buy a house?
- What should be my mix of MF, Stocks, Gold, NPS, FD, PPF and ELSS if I want to invest 50k per month?
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