EPFO: A significant news update is anticipated concerning over 65 million members of the Employees’ Provident Fund Organization (EPFO). These members may face an unexpected development very soon.
Decision regarding a potential reduction
The Central Board of Trustees (CBT) of the EPFO is scheduled to convene, during which the interest rates for the Employees’ Provident Fund (EPF) for the financial year 2025 will be assessed. Reports suggest that a decision regarding a potential reduction in the deposit interest rate may be made during this meeting. This decision is likely influenced by an increase in claim settlements, as well as declines in the stock market and bond yields.
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EPFO had raised the interest rates from 8.15 percent to 8.25 percent
Previously, the EPFO had raised the interest rates from 8.15 percent to 8.25 percent last year. Last week, the Investment and Accounts Committee of the EPFO reviewed the organization’s financial performance, leading to a recommendation to lower the interest rates on deposits. Consequently, the interest rates will be deliberated in the upcoming CBT meeting on Friday. Should the CBT endorse the recommendation to reduce interest rates, millions of EPF members could experience a significant setback.
EPFO provided an interest rate of 8.25%
In the fiscal year 2023-24, the EPFO provided an interest rate of 8.25% on an income of Rs 1,07,000 crore, compared to 8.15% in the previous year, 2022-23. Notably, the highest interest rate recorded was 12 percent on deposits during the year 1989-90. It is understood that the EPFO is contemplating the establishment of a fund reserve to ensure consistent interest rates for its 65 million members annually, aiming to shield them from the volatility of stock market interest rates and investment instruments.