Curious About Provident Fund Interest Rates? Understanding the 8.15% vs. 12% Difference

Understanding Provident Fund Interest Rates

What is meant by the interest rate on Provident Fund accumulations, which is 8.15% for the year 2022-23, and how is it different from the interest rate of 12% of PF?

The interest rate on Provident Fund accumulations refers to the percentage at which the funds in your Provident Fund account grow over time. In this case, it is set at 8.15% for the year 2022-23. On the other hand, the interest rate of 12% on PF indicates a different rate at which your PF contributions earn interest. The variance in these rates can impact the growth and overall value of your Provident Fund investments. It's essential to understand these rates to make informed decisions about your savings and financial planning.

Hi,

For accumulated PF contributions, the government declares the interest rate on a yearly basis. For pension contributions, interest is not applicable.

Employees and employers need to contribute to the PF, which will be 12% of the earned basic salary. This 12% is not an interest rate but the percentage of PF contribution to be paid. For employees eligible for a pension, 12% of the basic salary goes directly to PF, whereas 8.33% of the employer's contribution goes to the pension fund (with an upper ceiling of Rs. 1250), and the remaining 3.67% goes to the PF.