The Employees’ Provident Fund Organization (EPFO) is to convene on February 28 to determine the interest rate on PF contributions for the financial year 2024-25-important decision. The decision may affect crores of EPFO members throughout the country.
The reports suggest that the PF interest rate may be lower than that of the previous financial year, at 8.25% announced.
What to Expect from the EPFO Meeting?
The interest rates for PF for the coming year will be discussed and declared from this decision-making apex body, the Central Board of Trustees (CBT). As far as sources are concerned, it is speculated that there could be a small reduction in the rates, hovering around 8.2%-8.25%. This decrease is attributed to the decline in total bond yields during one year, which has drawn down the overall returns received by the EPFO on investment.
Why the Decline in PF Interest Rate?
Most of the corpus out of EPFO is invested in government securities and bonds. As the bond yields have dropped in recent months, the income from this source has also been affected for the Organization. Last week, the EPFO investment committee met to review its profile of income and expenditure and discussed the issue of reduction in the interest rate. This measure appears to be necessary for the organization in the pursuit of maintaining its financial health.
What is the Current PF Interest Rate and the Contributions?
The interest rate for FY 2023-24 has been announced by EPFO at 8.25 %, a small increase compared to the previous year’s 8.15 % from the economic year 2022-23. As per the annual report of the EPFO, the organization recorded contributions of ₹2.26 lakh crore in the fiscal year 2023-24, up 6.54% year-on-year. The total investments of the EPFO as of March 31, 2024, stood at ₹15.29 lakh crore.
Pension Matters on a Must-Discussed Agenda
Aside from the PF interest rates, other agendas that may be discussed during the upcoming CBT meeting are those concerning pensions. The CBT is headed by the Union Labour Minister and will review all policy decisions within the EPFO. The executive committee of the EPFO met on February 26, followed by a meeting of the investment committee last week to pave the way for tomorrow’s crucial deliberations.
What Does This Mean for the Members of EPFO?
If there is a reduction in the PF interest rate, then it will again prove to be the icing on the cake for millions of subscribers who are depending upon their savings in PF for long-term financial security. But that, again, has to do with considerable consideration for sustainability and stability in returns so that the organization is to be above ground in meeting its obligations to its members.
Read Also: New Rules Effective from March 1: Impacting Your Finances, Taxes, and Daily Life