The Employees’ Provident Fund Organisation (EPFO) may soon lower the interest rate on provident fund deposits.
According to a report by The Economic Times, the rate for FY 2025–26 could be reduced to between 8% and 8.20%, down from 8.25% in FY 2024–25.
The final call is expected at the EPFO’s 239th Central Board of Trustees (CBT) meeting, likely to be held in early March.
The move is aimed at balancing the fund’s long-term stability with rising payout commitments as more people join the EPF system.
Why EPFO May Cut Interest Rates
EPFO is facing growing financial pressure as its subscriber base expands under government employment schemes.
With more members eligible for payouts, maintaining a safety buffer in the corpus has become a priority.
Officials cited in the report say a slight rate cut could help EPFO manage higher withdrawals while protecting long-term returns.
This would ensure the fund remains financially secure despite increasing obligations.
Political Factors Could Delay a Cut
Despite financial concerns, political considerations may influence the final decision.
Assembly elections are due in several states, including West Bengal, Tamil Nadu, Kerala, Assam, and Puducherry.
Because of this, EPFO may choose to keep the interest rate unchanged for the third year in a row to avoid upsetting millions of salaried voters.
The report suggests that both options—cutting or maintaining the rate—are still under active discussion.
How the Final Rate Will Be Decided
Before the CBT meeting, the Finance, Investment and Audit Committee (FIAC) will meet in the last week of February.
The committee will review EPFO’s investment performance during the current financial year and suggest a suitable interest rate.
Once the CBT approves the rate, it will need clearance from the finance ministry.
After that, the labour and employment ministry will issue a formal notification.
If all goes as planned, the interest amount will be credited to members’ accounts by mid-2026.
Wage Ceiling Hike Also Under Discussion
Apart from interest rates, EPFO is also expected to discuss increasing the wage ceiling for provident fund coverage.
The limit may be raised from ₹15,000 to ₹25,000 per month.
This follows a Supreme Court directive issued in January, asking EPFO to revise the ceiling within four months.
The court noted that inflation and rising salaries have pushed many workers outside mandatory EPF coverage.
If approved, the move could bring a larger section of the workforce under social security, making EPF benefits accessible to more employees across sectors.
