No change in EPF rate, 8.25% set for 2024-25: What this means for you

The Employees' Provident Fund Organisation (EPFO) board on Friday retained  8.25 per cent interest rates on employees' provident fund deposits for 2024-25 despite rising inflation, said PTI citing sources. 

 

The EPFO rate refers to the interest rate set by the Employees' Provident Fund Organisation (EPFO) for the Provident Fund (PF) contributions of employees in India. The interest rate is declared annually by the EPFO, and it applies to the contributions made by both employees and employers towards the EPF account.

 

The EPFO board retained the previous year's EPF deposits interest rates after they were increased marginally to 8.25 percent for 2023-24, from 8.15 percent in 2022-23.

 

 "EPFO maintaining the Provident Fund (PF) interest rate at 8.25% for 2024-25 is a welcome move for employees, ensuring steady growth of their long-term savings. This decision benefits over seven crore subscribers by providing a reliable financial cushion. As EPF is a crucial retirement savings tool, a higher interest rate enhances wealth accumulation and strengthens financial security post-retirement. The move ensures stability by offering competitive returns, giving employees confidence in their future financial planning. With EPF being a tax-efficient and risk-free investment, this consistency in interest rates further encourages disciplined long-term savings," said Adhil Shetty, CEO of Bankbazaar.com.

 

Importance of EPFO Rate:

Retirement Savings: The EPF is a crucial retirement savings scheme for salaried employees in India. The EPFO rate determines the returns on the funds accumulated in an individual's PF account, which will be used during retirement or for emergencies.

 

Long-Term Financial Planning: The EPFO rate affects an employee's long-term savings. Higher interest rates lead to better returns on the money accumulated in the account, helping employees build a more substantial retirement corpus.

 

Government’s Support: The EPFO rate reflects the government's commitment to ensuring that employees save for their retirement in a safe and reliable manner. It provides a stable source of income after retirement, as the EPF scheme is backed by the government.

 

Encourages Savings: The EPF system encourages employees to save a portion of their salary for the long term, which is critical for their financial security post-retirement. The interest rate provides an incentive to save more.