EPFO keeps interest rate unchanged at 8.25% for FY26
What's the story
The Employees' Provident Fund Organisation (EPFO) has announced its decision to retain the interest rate on provident fund deposits at 8.25% for the financial year 2025-26. The move, which comes after a similar decision last year, will benefit more than seven crore active EPFO subscribers and nearly 30 crore total subscribers. The decision was made during the EPFO's Central Board of Trustees (CBT) meeting chaired by Union Minister of Labour and Employment Mansukh Mandaviya today.
Approval process
Interest rate approved by CBT, sent to Finance Ministry
The interest rate, which is one of the highest in the country for any savings scheme, has been approved by the CBT. It will now be sent to the Finance Ministry for ratification. Once approved by the government, it will be officially notified by the Ministry of Labour and Employment and credited into subscribers' accounts by mid-year. Despite market volatility affecting investment returns, state elections have prompted this decision to maintain last year's interest rate level.
Rate evolution
Last year's interest rate was also set at 8.25%
Last year, the EPFO retained the 8.25% rate of interest for the 2024-25 fiscal year. In 2024, the EPFO had marginally increased the interest rate to 8.25% for the fiscal year 2023-24, up from 8.15% in 2022-23. However, before that, it had reduced the interest on post-retirement deposits for FY21-22 to a four-decade low of 8.1%.
Market impact
EPFO expects ₹650cr loss
The EPFO's investment returns are tied to government security yields and equity returns. The decision to keep the interest rate at 8.25% is seen as a response to potential financial market volatility. By maintaining this rate, the retirement fund body expects a loss of ₹650 crore, which will be adjusted against last year's surplus of ₹5,300 crore.