MC EXCLUSIVE EPFO likely to stick to 8.25% interest rate for FY26

At present, the EPFO has a total corpus of about Rs 25-26 lakh crore.

• EPFO may keep PF interest rate unchanged at 8.25% for 2025-26
• CBT meeting to decide rate likely in first week of March
• EPFO plans to diversify investments for higher future returns

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The Employees' Provident Fund Organisation (EPFO) is likely to leave the interest rate on deposits for FY26 unchanged at 8.25 percent, two persons aware of the matter told Moneycontrol.

If the 8.25 percent holds, 2025-26 will be the third straight year when the rate will remain unchanged.

The EPFO may ask the Central Board of Trustees, which is expected to meet in the first week of March, to lower the rate marginally but it is likely to retain the prevailing rate, they said.

The CBT is the apex decision-making body of the EPFO, which oversees how the corpus is managed, invested, and distributed.

The EPFO interest rate is calculated every month based on the subscribers' balance, but is credited annually to their account at the end of a financial year.

CBT decides on the rate based on the returns on investments that EPFO generates.

At present, the EPFO has a total of about Rs 25-26 lakh crore, which it has invested in equity and debt instruments.

About 41 percent of the corpus is invested in State Development Loans (SDL), 16 percent in central government securities, 15.9 percent in corporate bonds, and 9.5 percent in exchange traded funds, sources said.

"So far in FY26, indices have climbed up at a reasonable rate, which would have helped EPFO to get modestly higher returns on its investments," said one of the sources cited above.

The actual data would only be presented in the March meeting of the CBT.

The Nifty 50 gained 10.5 percent between December 31, 2024, and December 31, 2025.

In FY24, the investment portfolio of EPFO generated a yield of 7.62 percent, while the interest rate for subscribers was pegged at 8.25 percent.

The second source said EPFO is also aiming to diversify its portfolio and invest more corpus into equity to generate higher returns.

"This would allow the CBT to finalise above 9 percent interest for the EPFO subscribers," the source said.

A committee of EPFO, the RBI and the finance ministry is expected to be set up soon to look into the diversification of the investment corpus.

"Keeping the EPF interest rate unchanged at 8.25 percent for 2025–26 appears financially viable, provided the EPFO’s investment income and surplus position remain robust in a moderating rate cycle. Stability in the declared rate signals prudent fund management," noted Rahul Singh, an associate professor at OP Jindal Global University.