The Employees’ Provident Fund Organization (EPFO) has decided to maintain the 8.25% interest rate on EPF for the financial year 2024-25, keeping it the same as last year.
In a recent Central Board (CBT) meeting, several important decisions were made, including improvements in insurance benefits.
These changes will offer financial security to thousands of employees and their families.
Now, insurance coverage will be available in the first year of employment, after leaving a job, and even if there is a gap between two jobs. This is a significant relief for private-sector employees.
How Do Interest and Contributions Work in EPF?
EPFO confirmed that the 8.25% interest will be deposited into employees’ accounts after approval from the Government of India. Both the employee and employer contribute to the EPF account. Here’s how:
The employee contributes 12% of their basic salary and dearness allowance.
The employer also contributes 12%, but it is split into:
8.33% for the Employees’ Pension Scheme (EPS).
3.67% added to the EPF account.
What Are the Changes in EPFO’s Insurance Scheme (EDLI)?
The Employees’ Deposit Linked Insurance (EDLI) scheme, introduced in 1976, provides insurance coverage to private-sector employees. The recent updates will benefit millions of employees.
1. Insurance Cover Even in the First Year of Employment
Before: If an employee died before completing one year of service, their family did not receive insurance benefits.
Now: If an employee dies within the first year, their family will receive at least ₹50,000 as insurance coverage. This change will help over 5,000 families every year.
2. Insurance Cover for 6 Months After Leaving a Job
Before: If an employee died six months after leaving a job, their family did not get insurance.
Now: If an employee dies within six months after their last salary deduction and their name is still in company records, the family will receive insurance benefits. This will help about 14,000 families every year.
3. Insurance Cover Even if There’s a Gap Between Jobs
Before: If an employee left a job and joined another after a gap of even 1-2 days, they lost insurance coverage.
Now: If there is a gap of up to 2 months between two jobs, the employee will still be eligible for insurance. This change will benefit around 1,000 employees’ families every year.
