A major update is on the way for over 6.5 crore members of the Employees’ Provident Fund Organization (EPFO). These members might face some surprising news tomorrow, Friday. The Central Board of Trustees (CBT) of EPFO is set to meet, where they’ll be discussing the EPF interest rates for the financial year 2025.
Reports suggest that there could be a decision to lower the deposit interest rate during this meeting, influenced by an increase in claim settlements and a decline in the stock market and bond yields. Last year, the EPFO had raised the interest rates from 8.15% to 8.25%.
An important announcement could come from the CBT board meeting. Just last week, the Investment and Accounts Committee of EPFO reviewed the organization’s earnings and expenses, leading to a recommendation to cut interest rates on deposits. If the CBT backs this recommendation, it could mean a significant shock for millions of EPF members.
For context, EPFO provided an interest rate of 8.25% on an income of Rs 1,07,000 crore for the year 2023-24, while the previous year saw an interest rate of 8.15%. The highest interest rate ever given was 12% back in the year 1989-90.
EPFO is looking to set up a fund reserve.
They’re planning to create this reserve to ensure that all 6.5 crore members receive consistent interest every year. The goal is to shield members from the ups and downs of stock market interest rates and other investment tools.
Officials are currently working on this proposal. Recently, it was reported that a team led by the EPFO chairman has started an internal review to develop a system for this. An official mentioned to ET Bureau, “The EPFO aims to safeguard its members from any variations in returns from investments in different instruments, including exchange-traded funds. Once this reserve is established, EPFO members will enjoy stable interest on their deposits.”