_An illustration I culled out on the historical Interest Rates offered by EPFO…since 1952_ ??
EPFO Interest rate started at about 3% in FY 1952 & peaked out in 1989 @ 12%
It stayed that way for untill FY 2000 (11 years of high rate)
From 2001… the rates started coming down from 12% to about 8.65% as of last year
Bottomline….
_*Did it create stealth wealth for many middle & upper middle group?*_
_*YES, IT DID*_
Should we contribute more than the minimum of what is required?
_*I doubt so*_
_Imagine a 30 or a 35 year compounding impact on the safest possible option in India with that kind of a EEE tax impact (exempt on contribution, exempt in interest earned & exempt on maturity)_
Untill now…. _*Yes, it did possibly create stealth wealth for the majority to atleast survive_*
Will it do so, in the future?
Very difficult to answer, but, maybe the minimum contributions should continue to go in there…
Btw….the differential parity inbetween NPS (new pension scheme) & EPFO will for sure get plugged some day in the future
One might possibly be forced to buy an annuity plan on a certain portion of EPFO maturity proceeds as well, like the NPS.
Untill then…keep moving ahead and keep contributing atleast the minimum required as part of long term asset allocation.