EPFO Retains 8.25% Interest on Provident Fund Deposits for FY24-25

Moneylife Digital Team 28 February 2025

Investor Interest

The employees' provident fund organisation (EPFO) has recommended maintaining an 8.25% annual interest rate on employees' provident fund (EPF) deposits for FY24-25. This decision was made during the 237th meeting of the central board of trustees (CBT), chaired by Union minister for labour & employment, Dr Mansukh Mandaviya, in New Delhi.

The proposed interest rate will be officially notified by the government of India. Once ratified, EPFO will credit the interest to its subscribers' accounts.

In addition to the interest rate recommendation, the CBT approved significant modifications to the employees' deposit-linked insurance (EDLI) scheme to enhance financial security for members' families.

Here are the key changes in EDLI...

Minimum Benefit for Death within One Year of Service: A minimum life insurance benefit of Rs50,000 will be provided if an EPF member passes away without completing one year of continuous service. This amendment is expected to benefit over 5,000 cases annually.

Benefit for Members Dying after a Non-contributory Period: Previously, EDLI benefits were denied in cases where members died after a gap in contributions. Now, if a member dies within six months of their last contribution, the EDLI benefit will be admissible, provided the member's name has not been removed from the employment records. This change is estimated to benefit over 14,000 cases annually.

Consideration of Service Continuity: Earlier, even a short gap between employments could lead to denial of benefits. Under the new modifications, a gap of up to two months between two spells of employment will be considered continuous service, ensuring eligibility for higher EDLI benefits. This adjustment is expected to benefit more than 1,000 cases annually.

These enhancements aim to provide greater financial support to over 20,000 families each year, ensuring better financial protection and reducing hardships faced by families in distress.

CBT was also briefed on the implementation of the Supreme Court's judgment regarding pension on higher wages, with 72% of applications processed to date. Additionally, the EPFO has successfully implemented the centralised pension payment system (CPPS) across all regional offices since January 2025. This system disburses pension payments through a centralised account, significantly reducing grievances among pensioners.

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