The Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO) is likely to recommend an 8.2-8.25% interest rate for its 31 crore members this year, according to reports from The Times of India. The retirement savings body paid 8.25% last year, maintaining the same rate from the previous financial year. In FY24, EPFO had raised the interest rate to 8.25% from 8.15% in FY23, while in FY22, the interest rate had plunged to a four-decade low of 8.1%.
As reported by The Times of India, stock markets and equities have not performed up to expectations this year due to global volatility. Government bond yields have also been tepid this year, where most of EPFO's corpus is invested. A CBT member stated that income generated is expected to be lower due to these market conditions.
According to The Times of India, the investment committee of the board will discuss the retirement fund body's income and expenditure profile and take a view on the interest rate on Monday. The CBT, chaired by labour minister Mansukh Mandaviya, will convene later in the day. Once approved by the CBT, the interest rate will have to be ratified by the finance ministry, after which it will be credited to the subscriber's accounts by the middle of the next financial year.
As reported by The Times of India, the National Front of Indian Trade Unions national president Deepak Jaiswal has expressed support for maintaining the high interest rate. Jaiswal noted that lakhs of new workers have joined in the last year due to Viksit Bharat Rojgar Yojana, leading to a boost in the investible corpus. He also highlighted that the organization had a healthy income surplus last financial year, even after the payout, and the interest stabilization reserve that the government is creating will support high interest rates.