Labour Minister confirmed that for current fiscal, interest on Employees Provident Fund is fixed at 8.5%. Previously for the years 2010-11 it was 9.5% and for 2011-12 it was 8.25%. So as was hope from all it is now 8.6% which is really beneficial to salaried class.
But when you compare with Public Provident Fund (PPF) interest rate which is 8.8% for current year, it looks bit low. Only relief for the subscribers of EPF is that-Social Welfare emotion attached with it. Hence government will also play safe in investing and distributing it to beneficiaries.
We cant say the same increasing trend will continue in future also as rate revision on both the schemes revised yearly. But for tax benefit point and safer heaven of investments, still both EPF and PPF holds best options to Indian non risky investors. In terms of investment EPF holds good as your employer too will contribute upto 12% of your salary and if you wish you can voluntarily contribute more to build a retirement corpus. But as EPF is defined contribution plan, it is associated with few risks too. Those are-It is difficult to build a good corpus for the employees who start their profession lately and participants will bear the risk of investment which you can notice by the yearly changes of EPF rates.
So once again I am repeating the same line (keeping in mind of voluntary contributors of EPF) -Plan your goal and accordingly choose the options in which you want to invest based on your risk appetite. Happy Investing !!!
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