EPFO trustees for 8.25% rate, its investment panel had suggested 8.1%
The 8.25% recommendation by the board came despite EPFO’s own investment sub-committee and the Ministry of Finance suggesting that the interest rate be cut to 8.10% for 2025-26.
THE CENTRAL Board of Trustees of the Employees’ Provident Fund Organisation (EPFO), headed by Labour and Employment Minister Mansukh Mandaviya, on Monday recommended an interest rate of 8.25% to its over 7.8 crore contributing subscribers for the third straight year in 2025-26.
The 8.25% recommendation by the board came despite EPFO’s own investment sub-committee and the Ministry of Finance suggesting that the interest rate be cut to 8.10% for 2025-26.
By recommending the interest rate at 8.25%, the retirement fund body is estimated to face a loss of Rs 944.06 crore, according to discussions during the CBT meeting, two members said. An 8.10% interest rate, as suggested by the EPFO’s investment sub-committee would have resulted in a surplus of Rs 1,675.82 crore. In 2024-25, based on the actual income and expenditure details shared in the meeting, the surplus was Rs 5,480.34 crore.
“On the basis of this year’s contribution and surplus amount, it was proposed that the interest rate for 2025-26 be reduced to 8.10%, and the same was proposed by the investment sub-committees and concurred by the Finance Ministry. However, under sustained pressure and strong representation by the trade unions, the Chairman consented to continuing with the interest rate at 8.25% despite a projected deficit of Rs 944 crore, which can be adjusted from the previous year’s surplus,” said SP Tiwari, Member, CBT and National General Secretary, Trade Union Co-ordination Centre.
The EPFO’s board members said the interest rate calculations are based on income estimates of 11 months and are subject to change by March-end. The deficit projections, which come in the backdrop of the slide in stock markets, will be adjusted against the previous year’s surplus, the members said.
“Interest rate was kept steady at 8.25% despite uncertainties in financial markets and tense geopolitical situation and Israel-US vs Iran war…next year we expect creation of Interest Stabilization Reserve to formalise the consistency and predictability of stable interest payout to subscribers,” Vineet Nahata, CBT member and employers’ representative from PHD Chamber of Commerce and Industry said.
The decision to maintain the interest rate comes in a year when elections are going to be held in four states and one UT. The previous hike in EPFO interest rate to 8.25% was announced ahead of the Lok Sabha elections in 2024 for 2023-24, slightly higher than 8.15% in 2022-23.
The EPFO’s investment returns are linked to the yield on government securities and returns on equity investments.
The Ministry of Labour and Employment in a statement said that the EPFO has been able to declare an interest rate of above 8% for the past several years owing to good returns given by ETF and other investments. “The decision reflects the strong credit profile of EPFO’s investment portfolio and its sustained ability to deliver competitive returns to its members,” it said.
It will now send the interest rate recommendation of 8.25% for 2025-26 to the Ministry of Finance for ratification, after which the EPFO would credit the interest to the EPF subscribers.
Pilot to settle claims in inoperative accounts
To provide relief to workers who have not yet claimed their PF dues, the EPFO Board approved a project to ensure the release of nearly Rs 2,800 crore into their accounts. An account is treated as inoperative if no contribution is received for three years in a row after the member has attained 55 years of age or from the date of retirement, whichever is later.
For liquidation of such accounts, the Board approved a pilot project for auto-initiation of claim settlement in inoperative EPFO accounts with unclaimed balances of Rs 1,000 or less. In the first phase, around 1.33 lakh such accounts, amounting to nearly Rs 5.68 crore will be covered, a statement by the Ministry of Labour and Employment said.
To simplify and fasten the process, the funds will be directly credited to members’ Aadhaar-seeded and EPFO-linked bank accounts without requiring fresh claims or documentation. Subsequently, the project will be extended in phases to accounts with balances above Rs 1,000.
New PF, pension schemes
The Board also approved the notification of new social security schemes under the Code on Social Security, 2020 to align the existing EPF, EPS (Employees’ Pension Scheme) & EDLI (Employees’ Deposit Linked Insurance) schemes with the Code on Social Security, 2020.
CBT members said the details about the new schemes need public consultation. “The schemes need to be discussed with central trade unions and a larger tripartite consultation is required,” R Karumalaiyan, employees’ representative in CBT and member of Centre of Indian Trade Unions said.
THE CENTRAL Board of Trustees of the Employees’ Provident Fund Organisation (EPFO), headed by Labour and Employment Minister Mansukh Mandaviya, on Monday recommended an interest rate of 8.25% to its over 7.8 crore contributing subscribers for the third straight year in 2025-26.
The 8.25% recommendation by the board came despite EPFO’s own investment sub-committee and the Ministry of Finance suggesting that the interest rate be cut to 8.10% for 2025-26.
By recommending the interest rate at 8.25%, the retirement fund body is estimated to face a loss of Rs 944.06 crore, according to discussions during the CBT meeting, two members said. An 8.10% interest rate, as suggested by the EPFO’s investment sub-committee would have resulted in a surplus of Rs 1,675.82 crore. In 2024-25, based on the actual income and expenditure details shared in the meeting, the surplus was Rs 5,480.34 crore.
“On the basis of this year’s contribution and surplus amount, it was proposed that the interest rate for 2025-26 be reduced to 8.10%, and the same was proposed by the investment sub-committees and concurred by the Finance Ministry. However, under sustained pressure and strong representation by the trade unions, the Chairman consented to continuing with the interest rate at 8.25% despite a projected deficit of Rs 944 crore, which can be adjusted from the previous year’s surplus,” said SP Tiwari, Member, CBT and National General Secretary, Trade Union Co-ordination Centre.
The EPFO’s board members said the interest rate calculations are based on income estimates of 11 months and are subject to change by March-end. The deficit projections, which come in the backdrop of the slide in stock markets, will be adjusted against the previous year’s surplus, the members said.
“Interest rate was kept steady at 8.25% despite uncertainties in financial markets and tense geopolitical situation and Israel-US vs Iran war…next year we expect creation of Interest Stabilization Reserve to formalise the consistency and predictability of stable interest payout to subscribers,” Vineet Nahata, CBT member and employers’ representative from PHD Chamber of Commerce and Industry said.
The decision to maintain the interest rate comes in a year when elections are going to be held in four states and one UT. The previous hike in EPFO interest rate to 8.25% was announced ahead of the Lok Sabha elections in 2024 for 2023-24, slightly higher than 8.15% in 2022-23.
The EPFO’s investment returns are linked to the yield on government securities and returns on equity investments.
The Ministry of Labour and Employment in a statement said that the EPFO has been able to declare an interest rate of above 8% for the past several years owing to good returns given by ETF and other investments. “The decision reflects the strong credit profile of EPFO’s investment portfolio and its sustained ability to deliver competitive returns to its members,” it said.
It will now send the interest rate recommendation of 8.25% for 2025-26 to the Ministry of Finance for ratification, after which the EPFO would credit the interest to the EPF subscribers.
Pilot to settle claims in inoperative accounts
To provide relief to workers who have not yet claimed their PF dues, the EPFO Board approved a project to ensure the release of nearly Rs 2,800 crore into their accounts. An account is treated as inoperative if no contribution is received for three years in a row after the member has attained 55 years of age or from the date of retirement, whichever is later.
For liquidation of such accounts, the Board approved a pilot project for auto-initiation of claim settlement in inoperative EPFO accounts with unclaimed balances of Rs 1,000 or less. In the first phase, around 1.33 lakh such accounts, amounting to nearly Rs 5.68 crore will be covered, a statement by the Ministry of Labour and Employment said.
To simplify and fasten the process, the funds will be directly credited to members’ Aadhaar-seeded and EPFO-linked bank accounts without requiring fresh claims or documentation. Subsequently, the project will be extended in phases to accounts with balances above Rs 1,000.
New PF, pension schemes
The Board also approved the notification of new social security schemes under the Code on Social Security, 2020 to align the existing EPF, EPS (Employees’ Pension Scheme) & EDLI (Employees’ Deposit Linked Insurance) schemes with the Code on Social Security, 2020.
CBT members said the details about the new schemes need public consultation. “The schemes need to be discussed with central trade unions and a larger tripartite consultation is required,” R Karumalaiyan, employees’ representative in CBT and member of Centre of Indian Trade Unions said.
