Nearly 15 crore people subscribed to employees provident fund scheme will earn interest at the rate of 8.65 per cent on their savings in 2016-17. This is the lowest in the last seven years.

The decision was taken at the 215th meeting of the Employees Provident Fund Organisation (EPFO)’s central board of trustees, chaired by Labour Minister Bandaru Dattatreya in Bengaluru on Monday.

Earlier, the EPFO’s income projections showed 8.62 per cent as the feasible interest rate for 2016-17. However, the EPFO trustees decided to fix the interest rate slightly higher at 8.65 per cent following protests by trade union members, sources present at the meeting said.

EPF subscribers got 8.8 per cent rate of interest on their provident fund savings in 2015-16 and 2014-15.

While an interest rate of 8.62 per cent would allow the EPFO to keep a surplus of around Rs 22 crore, fixing the interest rate at the present rate of 8.8 per cent would have left it with a deficit of Rs 700 crore, EPFO’s income projections showed.

According to sources in EPFO, the lower interest rate is on account of poor rate of return on investments made by the EPFO on all fronts.

Even at 8.65 per cent, EPF will deliver better returns than other savings instruments such as small saving schemes. While Public Provident Fund (PPF) offers 8 per cent rate of return, Sukanya Samriddhi Account Scheme (savings scheme for the girl child) gives 8.5 per cent annual return. The interest rate on term deposits is 7-7.8 per cent at present.