Employees’ Provident Fund Organisation (EPFO) has announced that the interest rate on provident fund (PF) deposits will remain at 8.25% for the financial year 2024-25.
This decision, made during the Central Board of Trustees (CBT) meeting on February 28, 2025, is expected to benefit over 70 million EPFO subscribers.
Alongside this announcement, the CBT also deliberated on increasing the minimum pension under the Employees’ Pension Scheme (EPS), a long-standing demand from pensioners and trade unions.
EPFO Interest Rate Retention: A Strategic Move
The decision to retain the 8.25% interest rate reflects the EPFO’s strategy to balance competitive returns with financial stability.
This rate, unchanged from the previous fiscal year, is based on higher income and improved returns from EPFO investments.
The interest rate proposal will now be sent to the Ministry of Finance for approval before being credited to subscribers’ accounts.
EPFO’s financial performance has been robust, with claims processed amounting to ₹2.05 lakh crore in 2024-25, compared to ₹1.82 lakh crore in the previous year.
The organization has consistently delivered competitive returns, making it a preferred savings option for salaried individuals.
Demand for EPFO Minimum Pension Hike Gains Momentum
The CBT meeting also addressed the pressing issue of increasing the minimum pension under the EPS.
Currently set at ₹1,000 per month since 2014, this amount has faced widespread criticism.
It is deemed inadequate, especially given rising inflation and increasing medical expenses.
Pensioners and advocacy groups have been demanding a hike to ₹7,500 per month, along with the inclusion of dearness allowance (DA) and free medical facilities for retirees and their spouses.
Union Labour Minister Mansukh Mandaviya, who chaired the meeting, acknowledged the demands but emphasized the need for a detailed study.
The CBT has directed the EPFO to prepare a comprehensive report on the financial implications of increasing the minimum pension.
This report will be crucial in determining the feasibility of meeting these demands without compromising the fund’s sustainability.
Challenges and Considerations
While the demand for a higher minimum pension has widespread support, it poses significant financial challenges.
The EPFO has highlighted the potential liabilities linked to higher pension payouts.
It estimates a deficit of ₹1.86 lakh crore if 50% of eligible applicants opt for higher pensions.
This has resulted in calls for a balanced approach. The approach should address both the needs of pensioners and the financial health of the EPFO.
The discussions at the CBT meeting underscore the importance of strengthening India’s social security framework.
The decision to retain the 8.25% interest rate ensures stable returns for subscribers.
The deliberations on pension reforms highlight a commitment to addressing the evolving needs of the workforce.
These measures are aligned with the government’s broader objective of enhancing social security and financial inclusion.
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