Finance ministry ratifies EPF rate of 8.25% for FY26; UPI withdrawal by month-end

The Central Board of Trustees (CBT), the top decision-making body of EPFO, typically recommends the rates annually around February-March, after which the recommendations are sent to the finance ministry for approval.

The finance ministry has ratified 8.25% interest rate for 2025-26 for over 7.8 crore contributing subscribers of the Employees’ Provident Fund Organisation (EPF), maintaining it at the same level as recommended by the Central Board of Trustees in March, a government official said on Thursday.

The Central Board of Trustees (CBT), the top decision-making body of EPFO, typically recommends the rates annually around February-March, after which the recommendations are sent to the finance ministry for approval. The official said that a notification by the Ministry of Labour and Employment on the interest rate is expected later this month.

The labour ministry is also expected to launch EPFO 2.0, a revamped digital ecosystem, by the end of June, which will allow its subscribers to withdraw 75% of their EPF corpus to their bank account via UPI or ATM.

Every EPFO member will be able to avail the UPI facility through the BHIM app, with the existing guardrails for UPI transactions to apply as they are. The facility is expected to help blue-collar workers in the EPFO ambit who may not otherwise be able to avail the withdrawal process through the online portal.

The proposed rollout of the new facility comes after the EPFO announced liberalisation of its withdrawal norms after its Board meeting in October last year, streamlining the withdrawal categories from 13 to three: essential needs (illness, education, marriage); housing needs; and special circumstances.

The Indian Express had reported in March that EPFO’s CBT, headed by Labour and Employment Minister Mansukh Mandaviya, had recommended an interest rate of 8.25% to its over 7.8 crore contributing subscribers for the third straight year in 2025-26.

The 8.25% recommendation by the board came despite EPFO’s own investment sub-committee and the Ministry of Finance suggesting that the interest rate be cut to 8.10% for 2025-26.

By recommending the interest rate at 8.25%, the retirement fund body is estimated to face a loss of Rs 944.06 crore, according to discussions during the CBT meeting in March.

An 8.10% interest rate, as suggested by the EPFO’s investment sub-committee, would have resulted in a surplus of Rs 1,675.82 crore. In 2024-25, based on the actual income and expenditure details shared in the meeting, the surplus was Rs 5,480.34 crore.

The official on Thursday said that the finance ministry has approved the proposal after vetting it, and the EPFO, in the direction of the labour ministry, is likely to credit the 8.25% rate of interest for 2025-26 into subscribers’ accounts this month itself.

The source also said that under the new ecosystem developed by the EPFO, the interest on the EPF will be credited into subscribers’ accounts immediately. In February last year, the EPFO had retained the 8.25% rate of interest for the 2024-25 fiscal year.

The EPFO, in 2024, increased the interest rate marginally to 8.25% for 2023-24, from 8.15% in 2022-23. In March 2022, EPFO lowered the interest on post-retirement deposits for 2021-22 to an over four-decade low of 8.10% from 8.5% in 2020-21.

The 8.10% rate for 2020-21 was the lowest since 1977-78, when the rate stood at 8%.

In March 2020, EPFO lowered the interest rate on provident fund deposits to a seven-year low of 8.5% for 2019-20, from 8.65% provided for 2018-19. EPFO provided an 8.65% interest rate to its subscribers in 2016-17 and 8.55% in 2017-18. The rate of interest was slightly higher at 8.8% in 2015-16.

The retirement fund body gave an 8.75% rate of interest in 2013-14 as well as 2014-15, higher than 8.5% for 2012-13. The rate of interest was 8.25% in 2011-12.

The finance ministry has ratified 8.25% interest rate for 2025-26 for over 7.8 crore contributing subscribers of the Employees’ Provident Fund Organisation (EPF), maintaining it at the same level as recommended by the Central Board of Trustees in March, a government official said on Thursday.

The Central Board of Trustees (CBT), the top decision-making body of EPFO, typically recommends the rates annually around February-March, after which the recommendations are sent to the finance ministry for approval. The official said that a notification by the Ministry of Labour and Employment on the interest rate is expected later this month.

The labour ministry is also expected to launch EPFO 2.0, a revamped digital ecosystem, by the end of June, which will allow its subscribers to withdraw 75% of their EPF corpus to their bank account via UPI or ATM.

Every EPFO member will be able to avail the UPI facility through the BHIM app, with the existing guardrails for UPI transactions to apply as they are. The facility is expected to help blue-collar workers in the EPFO ambit who may not otherwise be able to avail the withdrawal process through the online portal.

The proposed rollout of the new facility comes after the EPFO announced liberalisation of its withdrawal norms after its Board meeting in October last year, streamlining the withdrawal categories from 13 to three: essential needs (illness, education, marriage); housing needs; and special circumstances.

The Indian Express had reported in March that EPFO’s CBT, headed by Labour and Employment Minister Mansukh Mandaviya, had recommended an interest rate of 8.25% to its over 7.8 crore contributing subscribers for the third straight year in 2025-26.

The 8.25% recommendation by the board came despite EPFO’s own investment sub-committee and the Ministry of Finance suggesting that the interest rate be cut to 8.10% for 2025-26.

By recommending the interest rate at 8.25%, the retirement fund body is estimated to face a loss of Rs 944.06 crore, according to discussions during the CBT meeting in March.

An 8.10% interest rate, as suggested by the EPFO’s investment sub-committee, would have resulted in a surplus of Rs 1,675.82 crore. In 2024-25, based on the actual income and expenditure details shared in the meeting, the surplus was Rs 5,480.34 crore.

The official on Thursday said that the finance ministry has approved the proposal after vetting it, and the EPFO, in the direction of the labour ministry, is likely to credit the 8.25% rate of interest for 2025-26 into subscribers’ accounts this month itself.

The source also said that under the new ecosystem developed by the EPFO, the interest on the EPF will be credited into subscribers’ accounts immediately. In February last year, the EPFO had retained the 8.25% rate of interest for the 2024-25 fiscal year.

The EPFO, in 2024, increased the interest rate marginally to 8.25% for 2023-24, from 8.15% in 2022-23. In March 2022, EPFO lowered the interest on post-retirement deposits for 2021-22 to an over four-decade low of 8.10% from 8.5% in 2020-21.

The 8.10% rate for 2020-21 was the lowest since 1977-78, when the rate stood at 8%.

In March 2020, EPFO lowered the interest rate on provident fund deposits to a seven-year low of 8.5% for 2019-20, from 8.65% provided for 2018-19. EPFO provided an 8.65% interest rate to its subscribers in 2016-17 and 8.55% in 2017-18. The rate of interest was slightly higher at 8.8% in 2015-16.

The retirement fund body gave an 8.75% rate of interest in 2013-14 as well as 2014-15, higher than 8.5% for 2012-13. The rate of interest was 8.25% in 2011-12.