EPFO may ease PF interest rate to 8-8.2% in FY26

New Delhi: The Employees’ Provident Fund Organisation (EPFO) is expected to marginally reduce the interest rate on provident fund deposits for 2025-26 to 8-8.20%, as against 8.25% announced for 2024-25, when it holds its 239th Central Board of Trustees (CBT) meeting in the first week of March, to avoid eating into its corpus.

However, political compulsions, including elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry, over the next few months could compel the retirement fund body to maintain status quo for the third year in a row, said people familiar with the deliberations. “All options are being considered but with more people joining the EPFO under the Pradhan Mantri Viksit Bharat Rozgar Yojana, it is expected that the rates may come down slightly for payout to an increased number of people so that a minimum buffer is maintained with the EPFO,” said one of the persons, who did not wish to be identified.

Once approved by the CBT, the interest rate would be ratified by the finance ministry, after which it would be officially notified by the labour and employment ministry and subsequently credited to the subscribers’ accounts by the middle of this year.

The Finance, Investment and Audit Committee (FIAC) of the EPFO will meet in the last week of February to arrive at the interest rate on EPFO investments for this financial year, based on the returns on investments so far, and recommend it to the CBT for consideration.

The board is also expected to take up the issue of raising the wage ceiling under the EPFO to up to ₹25,000 per month from ₹15,000 per month to enhance social security coverage. The agenda of the CBT meeting is yet to be finalised.
The Supreme Court had in January directed the EPFO to raise the wage ceiling in four months, citing increasing wages and inflation which have left a large section of workers out of the social security net.

The ceiling of ₹15,000 has remained unchanged since 2014, although overall salaries for low-and mid-skilled employees may have risen during this period, leaving them out of the purview of mandatory PF coverage. The FIAC is a key subcommittee of the CBT, responsible for overseeing investment strategies and audit functions.