5 min readMar 1, 2025 02:07 AM IST
First published on: Feb 28, 2025 at 12:36 PM IST
The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO), headed by Union Labour and Employment Minister Mansukh Mandaviya, in its 237th meeting held Friday recommended keeping the interest rate for financial year 2024-25 unchanged from previous year at 8.25 per cent for its over 7.4 crore contributing subscribers.
The EPFO’s Board had last year hiked the EPF interest rate to the highest level in three years ahead of the Lok Sabha elections and has now retained it despite an overall rate cut cycle in the economy.
The EPFO’s investment returns are linked to the yield on government securities and equity returns. The decision to retain the interest rate was taken as it was felt there could be volatility in financial markets amid further rate cuts by the central bank. On February 7, the Reserve Bank of India (RBI) had cut the repo rate to 6.25 per cent after holding it at 6.5 per cent for two years.
By keeping the interest rate at 8.25 per cent, the retirement fund body is estimated to be left with a surplus of Rs 5,300 crore, higher than around Rs 300 crore surplus estimated for 2023-24, two Board members said. The EPFO had initially finalised a proposal to cut the interest rate to 8.20 per cent amid caution from the Finance Ministry but the Board then decided to keep the rate unchanged at 8.25 per cent, they said.
Some trade unions had even demanded a hike in interest rate to 8.30 per cent. “TUCC demanded to raise this rate of interest to 8.30 per cent as after paying this interest also, there will be a surplus of Rs 4,550 crore… the decision to keep the rate unchanged was taken just to be cautious considering the future risk of volatile financial market conditions,” S P Tiwari, General Secretary, Trade Union Co-ordination Centre (TUCC), and a member of the CBT, said.
The EPFO is also likely to make a provision of around Rs 1,500 crore due to the decision of the National Company Law Tribunal with regard to IL&FS and Reliance Capital, wherein the EPFO has invested earlier. Before FY24, the EPFO, which has over 30 crore total subscribers, had maintained the interest rate at 8.5 per cent both in 2019-20 and 2020-21, the EPFO had cut the interest rate in 2021-22 to 8.1 per cent, the lowest in four decades. It then hiked it marginally to 8.15 per cent in 2022-23.
Here’s a look at the interest rates over the years:
| Year |
EPFO Interest Rate |
| 2010-11 |
9.50% |
| 2011-12 |
8.25% |
| 2012-13 |
8.50% |
| 2013-14 |
8.75% |
| 2014-15 |
8.75% |
| 2015-16 |
8.80% |
| 2016-17 |
8.65% |
| 2017-18 |
8.55% |
| 2018-19 |
8.65% |
| 2019-20 |
8.50% |
| 2020-21 |
8.50% |
| 2021-22 |
8.10% |
| 2022-23 |
8.15% |
| 2023-24 |
8.25% |
| 2024-25* |
8.25% |
*as recommended by CBT, to be approved by Finance Ministry
The Ministry of Labour and Employment will now send the interest rate recommendation of 8.25 per cent for 2024-25 to the Ministry of Finance for ratification. After the ministry’s consent to the interest rate, the EPFO would credit the rate of interest for the current fiscal to the EPF subscribers.
The ministry in a statement said that compared to many other fixed-income instruments, the EPF offers relatively high and stable returns, ensuring steady growth of savings. “The interest earned on EPF deposits is tax-free (up to a specified limit), making it a highly attractive investment option for salaried individuals. This reflects strong confidence in the credit profile of EPFO’s investments and its ability to deliver competitive returns to its members,” it said.
The sustainability of the high interest rates announced by the EPFO has been questioned several times by the Finance Ministry in the last few years, nudging the EPFO to reduce the interest rate in line with the overall interest rate scenario since it continues to offer the highest interest rate among other saving instruments.
Hike in benefits under EDLI scheme
In the meeting, it was also decided to provide enhanced insurance benefits under the Employees’ Deposit Linked Insurance (EDLI) scheme. A minimum life insurance benefit of
Rs 50,000 will be provided in cases where an EPF member dies without completing one year of continuous service.
Also, insurance will be provided to members who die while in service after a non-contributory period. “Previously, EDLI benefits were getting denied in such cases considering these as deaths away from service. Now, 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 stuck off from rolls. The modification is estimated to result in benefits for more than 14,000 cases of such deaths every year,” the Labour and Employment Ministry said.
In February 2024, the Employees' Provident Fund Organisation (EPFO) had increased the interest rate on EPF marginally to 8.25 per cent for 2023-24, from 8.15 per cent in 2022-23. (File image) 
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