How market uncertainty pushed EPFO to keep interest rate unchanged for third straight year

But the amount to be credited to the subscribers account -- at 8.25% -- would lead to the loss for EPFO's corpus for FY26

• EPFO keeps interest rate unchanged at 8.25% for FY26
• Over 7.8 crore subscribers to benefit from stable returns
• EPFO faces estimated Rs 944 crore loss for FY26 at this rate

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The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) on Monday recommended keeping the interest rate for financial year 2025-26 unchanged from previous year at 8.25% for its over 7.8 crore contributing subscribers.

At 8.25%, interest rate has remained unchanged for the third straight year. Moneycontrol had reported on February 16 that EPFO is likely to retain interest rate of FY26 at 8.25%.

The interest rate would be officially notified by the Government of India, following which EPFO would credit the rate of interest into the subscribers’ account.

Despite global uncertainties, EPFO has maintained strong financial discipline, ensuring stable and competitive returns without straining the interest account, the labour ministry said in a statement.

The decision benefits crores of workers by strengthening their retirement security, while reaffirming EPFO’s commitment to safeguarding contributions and delivering prudent, sustainable, and attractive returns compared to other similar investment avenues, it said.

"We are taking steps increase earning capability of EPFO. This (8.25% interest) is a prudent and conservative decision, given volatility in the markets and economy. If the financials turn positive, we will definitely increase the interest rate going forward," said Vineet Nahata, member, EPFO's Central Board of Trustees.

The decision to maintain the interest rate comes in a year when elections are going to be held in four states and one UT.

Sources in the CBT say, the initial discussion was to hike the rate to 8.3% — but the same was retained as returns on investments have not been much higher in 2025-26, and future returns could suffer from volatility in financial markets.

By keeping the interest rate at 8.25%, the retirement fund body is estimated to face a loss of Rs 944 crore in 2025-26.

The income earned in first 11 months of FY26 is Rs 143,149 crore. But the amount to be credited to the subscribers account — at 8.25% — would lead to the loss for EPFO's corpus for FY26. In FY25, post the interest rate credit — the EPFO had a surplus of about Rs 5,480 crore, sources told Moneycontrol.

"An internal committee of EPFO had suggested that the fund should not release an interest of over 8.1 percent for 2025-26, but the CBT decided to retain the interest rate at 8.25 percent – the highest return given by any financial institution in 2025-26. The Rs 944 crore loss will be funded from surplus of last year. The surplus can cover the losses for the next 2-3 financial years," SP Tiwari, President of TUCC and CBT Member, said.

EPFO has been able to declare an interest rate of above 8% for the past several years owing to good returns given by ETF and other investments, said the labour ministry. The decision reflects the strong credit profile of EPFO’s investment portfolio and its sustained ability to deliver competitive returns to its members, it said.