Good news for the millions of Employees’ Provident Fund Organisation (EPFO) members!
The government is planning to set up an ‘Interest Stabilisation Reserve Fund’ for EPFO.
This fund aims to ensure a stable interest rate for the more than 6.5 crore members’ Provident Fund (PF) contributions.
Protecting from market fluctuations
According to The Economic Times, the Ministry of Labor and Employment has begun an internal study on this.
The goal is to provide a consistent interest rate to EPFO members, even when market conditions change. This will help shield members from the effects of market volatility.
How will the fund work?
The plan involves EPFO setting aside extra income from interest each year to create a reserve fund.
This fund will be used when returns from EPFO’s investments drop, ensuring that members still receive a fixed interest rate, regardless of market changes.
Timeline for implementation
This plan is currently in its early stages and could be finalized by the end of this year.
If approved by the Central Board of Trustees (CBT) of EPFO, it may be implemented starting in 2026-27.
The Central Board of EPFO is chaired by the Minister of Labor and Employment.
Interest rate changes
EPFO interest rates have fluctuated over the years. For the financial year 2023-24, the rate was set at 8.25%.
This rate might remain the same for 2024-25, pending a CBT meeting on February 28.
As per a Mint report, EPFO interest rates started at 3% in 1952-53 and reached 12% in 1989-90.
The rate stayed at 12% until 2000-01, then dropped to 9.5% in 2001-02. By 2021-22, the rate fell to 8.1%, and was later raised slightly to 8.25%.
ATM facility for PF accounts
In January, the government announced that EPFO members would soon be able to withdraw money from their PF accounts using an ATM. They will be provided with a separate ATM card for this purpose.
