EPF Interest Rate Maintained At 8.25%; EPFO Continues Investments Across Bonds, ETFs And Government Securities

The Employees’ Provident Fund Organisation (EPFO) approved an interest rate of 8.25% on Employees’ Provident Fund (EPF) deposits for 2025–26, retaining the same rate for the second consecutive year after a decision by the Central Board of Trustees (CBT), according to an official statement.

The interest rate becomes effective after ratification by the Ministry of Finance. Once the ministry notifies the rate, EPFO will credit the interest to subscribers’ EPF accounts, according to the Ministry of Labour and Employment.

EPF is a government-backed retirement savings scheme for salaried employees and is administered by EPFO under the Ministry of Labour and Employment.

How EPF Contributions Are Invested

The contributions of the EPF funds accumulated from the employees as well as the employers are invested in a combination of both debt and equity instruments in line with the pattern of investment notified by the Ministry of Labour and Employment.

The funds set aside for the debt instruments are managed by portfolio managers appointed by the Central Board of Trustees. These portfolio managers are required to follow investment guidelines and the asset allocation framework periodically notified by the ministry.

The investment pattern allows a limited exposure to equities. According to the ministry’s guidelines, equity and equity-related investments must remain between 5% and 15% of the total corpus.

The equity investments are done in exchange-traded funds (ETFs) managed by asset management companies appointed by the Central Board of Trustees. These investments in exchange-traded funds are based on various benchmark indices like the BSE Sensex and NSE Nifty 50, as stated in the EPFO.

Investment Allocation Across Asset Classes

As per the EPFO Annual Report for FY24, EPF investments are spread across various asset classes.

Central government securities make up 17.04% of the total investments. Meanwhile, state development loans make up 46.01% of the total investments. State-guaranteed securities form 0.87% of the corpus, while the Special Deposit Scheme forms 3.54% of the total investments.

Corporate bonds of public sector undertakings/public sector financial institutions form 17.52% of the total investments, while corporate bonds of private sector companies form 5.02%.

Equity investments through ETFs account for 9.52% of EPF funds. Smaller allocations include 0.49% invested in Tri-Party Repo (TREPS) and Liquidity Management Funds (LMF), according to EPFO data.

Other Decisions Taken By The Central Board Of Trustees

During the meeting, the Central Board of Trustees also approved the EPFO Annual Report for 2024–25 and recommended it for tabling before Parliament.

The board approved a one-time amnesty scheme to address compliance issues involving income tax-recognised trusts that have not yet been covered or granted an exemption under the EPF & MP Act, 1952.

It also cleared a simplified standard operating procedure (SOP) for EPF exemptions by consolidating four existing SOPs and the exemption manual into a single framework aimed at reducing compliance requirements.

In addition, the board approved notification of new social security schemes under the Code on Social Security, 2020, along with the revised estimates for 2025–26 and budget estimates for 2026–27 for EPFO and the schemes administered by it.

The board also approved a comprehensive SOP to create a transparent and time-bound framework for investment oversight through the Investment Monitoring Cell, according to the official statement.