This week is important for about 7 crore account holders of the Employee Provident Fund Organization (EPFO), which handles the social security scheme.
The Central Board of Trustees (CBT) of EPFO is scheduled to meet on Friday, 28 February 2025, to determine the interest rate on the Employee Provident Fund (EPF) for the financial year 2024-25.
In the last financial year (2023-24), EPF account holders received an 8.25% interest rate, which was slightly higher than 8.15% in 2022-23 and 8.10% in 2021-22.
Since EPFO’s investments have been performing well, there is a high chance that the interest rate for 2024-25 will remain at 8.25%.
How EPFO Works and a Proposed New Fund
EPFO is India’s largest social security scheme for private sector employees. Every month, a part of an employee’s salary is deducted for the Provident Fund (PF), and the employer contributes an equal amount.
Employees can withdraw their PF savings in case of job loss, home purchase or construction, marriage, children’s education, or retirement.
During the upcoming meeting, the CBT may also discuss setting up an Interest Stabilization Reserve Fund.
This fund aims to provide stable returns for account holders even if interest rates fluctuate or investment earnings decrease. If approved, this fund could be introduced by 2026-27.
The Central Board of Trustees includes the Labor and Employment Minister, Mansukh Mandaviya, along with trade union representatives. Once a decision is made, the Finance Ministry must approve it before it is finalized.