The board of the Employees’ Provident Fund Organisation (EPFO) on Monday recommended retaining the interest rate on provident fund deposits at 8.25% for FY26. This marks the third consecutive year that EPF subscribers get this rate of return for their investments in the retirement fund.
The board’s recommendation will now be sent to the Ministry of Finance for ratification. Following approval, the Ministry of Labour and Employment will notify it, after which EPFO will credit the interest to subscribers’ accounts.
The decision was taken at the 239th meeting of the Central Board of Trustees (CBT), chaired by Union Labour and Employment Minister Mansukh Mandaviya. It will benefit around 78 million crore contributing (active) subscribers and nearly 300 million total subscribers.
Interest rates raised in 2024
In FY24, the EPFO raised the interest rate to 8.25% from 8.15% in the previous year. The interest rate had fallen to a four-decade low of 8.1% in FY22.
The ministry stated that despite global uncertainties, EPFO has maintained strong financial discipline, delivering stable and competitive returns without straining the interest suspense account.
“EPFO has been able to declare an interest rate of above 8% for the past several years owing to good returns from ETFs and other investments,” the ministry said. The EPFO’s corpus is over Rs 28.34 lakh crore at present.
What did CBT members say?
A CBT member said that the decision to retain the rate was influenced by potential volatility in financial markets. The rate of return to subscribers has been unchanged despite the relative underperformance of the equity markets and bond yields in the past year.
At 8.25%, EPFO is estimated to face a loss of Rs 944 crore in FY26. The liability at this rate stands at Rs 1.44 lakh crore, while income in the first 11 months of FY26 is Rs 1.43 lakh crore on a principal of Rs 17.46 lakh crore. However, this shortfall will be adjusted using the surplus of Rs 5,480 crore from FY25.
According to R. Karumalaiyan, CBT member and National Secretary, Centre of Indian Trade Unions, EPFO invests 67.5% of its corpus in government securities, 20.34% in debt instruments, 1.92% in short-term debt, and nearly 10.23% in equities.
The decision to hold the rate comes in a year with assembly elections scheduled in four states and one Union territory. The last change in the EPF interest rate was for FY24, when it was increased to 8.25% from 8.15% in FY23. It has remained unchanged since then.
The ministry highlighted EPFO’s robust operational and financial performance in FY25. Total contributions reached Rs 3.35 lakh crore, with 2.86 lakh new establishments brought under coverage and 12.28 million new members enrolled in FY25.
The CBT also approved a pilot project for the auto-initiation of claim settlements in inoperative EPFO accounts with unclaimed balances of Rs 1,000 or less. Under EPF rules, an account becomes inoperative if no contributions are received for three continuous years after the member reaches 55 years of age or retires, whichever is later. The first phase will cover around 1.33 lakh such accounts totalling nearly Rs 5.68 crore.
Additionally, the board approved a one-time amnesty scheme to address compliance issues for income tax-recognised trusts that are yet to be covered or exempted under the EPF & MP Act, 1952, in line with the provisions of the Finance Act, 2026. The scheme aims to bring such establishments and trusts into compliance within a defined six-month period, primarily to protect workers’ interests, while waiving damages, interest, and penalties for those that have already provided benefits equal to or better than the statutory scheme.