Retirement fund body maintains 8.25% for the third straight year, citing a surplus cushion and steady portfolio returns
The Employees’ Provident Fund Organisation (EPFO) has retained the interest rate on provident fund deposits at 8.25 per cent for the financial year 2025–26, following a meeting of its Central Board of Trustees (CBT) held on Monday.
The decision reflects a calibrated approach by the retirement fund body, balancing subscriber returns with portfolio performance in a moderating interest rate environment. With the rate unchanged at 8.25 per cent, this marks the third consecutive year at the same level.
The CBT — the apex decision-making body of the EPFO, headed by Labour and Employment Minister Mansukh Mandaviya—reviews the organisation’s income, surplus position and overall investment performance before finalising the annual rate. The declared interest is based on returns generated from investments across government securities, debt instruments and equities.
The EPFO manages a corpus of over Rs 28 lakh crore and follows a diversified investment strategy. It allocates 45–65 per cent of fresh inflows to government securities, 20–45 per cent to other debt instruments, 5–15% to equities through exchange-traded funds (ETFs), and up to 5 per cent to short-term debt instruments.
Earlier portfolio disclosures indicate that around 41% of the overall corpus is invested in State Development Loans (SDLs), 16 per cent in central government securities, 15.9 per cent in corporate bonds and about 9.5 per cent in ETFs.
Interest on EPF deposits is calculated on a monthly running balance but credited annually at the end of the financial year.
Market performance during the year supported returns from the EPFO’s equity exposure. The Nifty 50 rose 10.5 per cent between December 31, 2024 and December 31, 2025. In FY24, the EPFO’s investment portfolio generated a yield of 7.62 per cent, while subscribers were offered 8.25 per cent, indicating the use of surplus buffers.
Surplus cushion and diversification push
The EPFO is examining further diversification of its portfolio, including calibrated exposure to equities, to enhance long-term returns. A committee comprising representatives from the EPFO, the Reserve Bank of India (RBI) and the finance ministry is expected to review the diversification strategy.
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