The interest rate for the Employees' Provident Fund (EPF) for FY25 is expected to be lowered from the current 8.25 percent, Business Standard reported on February 27, with falling markets and bond yields weighing on the decision.
The Central Board of Trustees of the Employees' Provident Fund Organisation (EPFO) is meeting on February 28 to decide on the rate.
The interest rate on the retirement savings of several crores of EPFO members is expected to be lowered amid falling stock market and bond yields, the report said.
Moneycontrol couldn't independently verify the report.
Last year, the Employees' Provident Fund Organisation (EPFO) had announced an interest rate of 8.25 percent for the FY24, up from 8.15 percent for the previous year.
The report quoted an unnamed employer representative in the board as saying that the rate of interest will possibly be lower as bond yields have dipped in recent months. The retirement fund body may not be left with much of a surplus to deal with any emergency, if a higher interest rate is announced, the source said.
Another board member reportedly told the publication that the EPF rate is likely to be lower as the investment panel is keen to maintain a surplus for deal with emergencies. Higher settlement of claims have left a smaller pool to tap for the annual EPF credits.
TUCC national general secretary Sheo Prasad Tiwari, who represents the employees, said the ongoing financial year has seen “decent” returns on investments, along with an increase in the subscribed base.
"These are the savings of millions of people belonging to the lower income groups. Cutting the interest rate is only going to exacerbate their sufferings in these times of high inflation. Our assessment is that it will remain unchanged as last year, if not move up," he told Business Standard.
The Indian stock markets have seen a continuous downturn over the past several months now, after a significant boom last year. After nearly touching 86,000 in September 2024, Sensex has now crashed over 11,000 points to hover around 75,000.
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