Do you know where is your EPF money invested? After the recent Government approval for an 8.1% interest rate on EPF for FY 2021-22, many felt anguish as 8.1% is the lowest rate in the last 40 years. Hence, many think that it is their right to get the highest interest rate on their EPF account forever and hence Government must declare forever the highest rate. Because they are HONEST taxpayers in India.
However, they are unable to understand how the EPFO will generate income from the EPF corpus (which is a combination of employer and employee contributions). I know that it hurts as the way the rates are going down. However, think as if you are the fund manager of EPF. Is it possible for you to generate a CONSTANT TAX-FREE HIGH-INTEREST rate forever? The reason for declaring the interest rate on annual basis is to analyze the profit generated from the invested amount and arrive at a decent rate of return.
However, few salaried are so anguish that their money from EPF is…