EPFO ratifies interest rate at 8.25% on employees provident fund deposits for FY25

The government has ratified the rate of interest on employees’ provident fund at 8.25 per cent for FY25, enabling the retirement fund body EPFO to deposit the annual interest accumulation in the post-retirement funds of over seven crore subscribers.

EPFO, on February 28, had decided to retain the interest rate of 8.25 per cent on employees’ provident fund (EPF) deposits for the financial year 2024-25, equal to the rate provided in the preceding fiscal. The approved rate of interest for 2024-25 was sent for concurrence of the Ministry of Finance.

“Ministry of Finance has given concurrence to 8.25 per cent rate of interest on the EPF for 2024-25 fiscal year and labour ministry sent a communication regarding this to the EPFO on Thursday,” a labour ministry official told news agency PTI. Now the interest amount as per the rate ratified for FY25 will be credited into the accounts of over seven crore subscribers of EPFO.

The decision on interest rate was taken at the 237th meeting of the central board of trustees of the EPFO chaired by Union Minister for Labour & Employment Mansukh Mandaviya in New Delhi on February 28. Compared to many fixed-income instruments, EPF offers relatively higher and stable returns, ensuring steady growth on post-retirement savings.

EPFO meetings’ key decisions today

Following the official ratification, the EPFO will credit the rate of interest into the subscribers’ accounts. Compared to many other fixed-income instruments, the Employees’ Provident Fund (EPF) offers relatively high and stable returns, ensuring steady savings growth.

The interest earned on EPF deposits is tax-free (up to a specified limit), making it an attractive investment option for salaried individuals. Following the actuarial valuation of the Employees’ Deposit Linked Insurance (EDLI) scheme, the Board approved key modifications to the scheme to provide greater financial security and support to members’ families.

A minimum life insurance benefit of ₹50,000 will be provided in cases where an EPF member dies without completing one year of continuous service. This amendment is expected to result in higher benefits for more than 5,000 cases of deaths in service every year.

Under the revised EDLI Scheme, if a member passes away within six months of their last contribution received, the EDLI benefit will be admissible, provided the member’s name is not struck off from the rolls. Under the modifications, a gap of up to two months between two spells of employment will be considered as continuous service, ensuring eligibility for higher quantum EDLI benefits.

EPFO interest rate changes

In February 2024, the EPFO had increased the interest rate marginally to 8.25 per cent for 2023-24, from 8.15 per cent in 2022-23. In March 2022, EPFO had lowered the interest on EPF for 2021-22 to an over four-decade low of 8.1 per cent, from 8.5 per cent in 2020-21. The 8.10 per cent rate of interest on EPF for 2020-21 was the lowest since 1977-78, when it stood at 8 per cent.

EPFO adds 1.46 million members in March

EPFO, which manages retirement savings for salaried employees, reported a net addition of 1.46 million subscribers in March, with just over half being first-time enrollees, according to an official statement on Wednesday.

EPFO recorded 754,000 new member enrollments in March. Provisional data showed that net subscriber additions rose by 1.15% compared to March 2024, reflecting stronger employment opportunities and growing awareness of employee benefits, supported by EPFO’s outreach efforts. New subscriptions in March rose 2.03% sequentially, and were up 0.98% year-on-year.