Central Board Recommends 8.25% Rate of Interest on EPF to its Subscribers for FY 2024-25

One of the major outcomes of the meeting was the recommendation of an 8.25% annual rate of interest on EPF accumulations for the financial year 2024-25.

The Union Minister for Labour & Employment and Youth Affairs & Sports, Dr. Mansukh Mandaviya, chaired the 237th meeting of the Central Board of Trustees (CBT), Employees' Provident Fund (EPF) in New Delhi. The meeting witnessed key discussions and decisions regarding the EPF interest rate, enhancements in insurance benefits, pension system reforms, and measures to streamline operations for better efficiency and transparency.

The meeting was attended by Vice-Chairman Sushri Shobha Karandlaje, Union Minister of State for Labour & Employment and Micro, Small & Medium Enterprises; Co-Vice-Chairperson Ms. Sumita Dawra, Secretary, Labour & Employment; and Member Secretary Mr. Ramesh Krishnamurthi, Central PF Commissioner, along with representatives from employers, employees, and senior officials from the Central Government and EPFO.

EPF Interest Rate Set at 8.25% for FY 2024-25

One of the major outcomes of the meeting was the recommendation of an 8.25% annual rate of interest on EPF accumulations for the financial year 2024-25. This rate is subject to official notification by the Government of India, after which EPFO will credit the interest to subscribers' accounts. The EPF remains a highly attractive investment option due to its tax-free interest earnings (up to a specified limit) and stable returns, reinforcing confidence in EPFO’s investment strategies.

Major Enhancements in Employees’ Deposit Linked Insurance (EDLI) Scheme

The CBT approved several key modifications to the Employees’ Deposit Linked Insurance (EDLI) scheme aimed at providing greater financial security to the families of EPF members. These changes address grievances and ensure a more inclusive approach to benefit claimants.

Key Enhancements:

1. Minimum Insurance Benefit for Death Within One Year of Service:

   • A minimum life insurance benefit of Rs. 50,000 will now be provided to the family of a deceased EPF member, even if the member had less than one year of continuous service.
   • This amendment is expected to provide higher benefits to over 5,000 families annually.

2. Benefit for Members Who Die After a Non-Contributory Period:

   • Previously, EDLI benefits were denied if a member passed away after a gap in contributions.
   • Under the revised scheme, if a member dies within six months of their last contribution, their family will still be eligible for EDLI benefits, provided their name remains on the employer’s rolls.
   • This change is expected to benefit over 14,000 families annually.

3. Consideration of Service Continuity for EDLI Benefits:

   • Earlier, a break of even one or two days (such as weekends or holidays) between jobs led to a denial of minimum EDLI benefits.
   • The revised rules allow a gap of up to two months between employment periods, ensuring continuous service eligibility for benefits ranging from Rs. 2.5 lakh to Rs. 7 lakh.
   • More than 1,000 families annually are expected to benefit from this change.

With these reforms, over 20,000 families of deceased EPF members will receive higher insurance benefits each year, enhancing social security and financial stability.

Update on Pension on Higher Wages (PoHW) Implementation

The CBT reviewed the status of Hon’ble Supreme Court's judgment dated November 4, 2022, regarding Pension on Higher Wages (PoHW). EPFO has adopted a mission mode approach to expedite processing and has successfully processed 72% of pending applications for higher pension eligibility.

Successful Implementation of Centralized Pension Payment System (CPPS)

The Employees’ Provident Fund Organization (EPFO) implemented the Centralized Pension Payment System (CPPS) from January 2025, streamlining pension disbursement across all Regional Offices (ROs).

• Key Benefits of CPPS:
  • Pension payments for all ROs are now processed through a Centralized Pension Disbursement Account (CPDA) at SBI’s New Delhi Branch.
  • Ensures faster and more efficient pension disbursement.
  • Reduces delays in transferring case details when pensioners shift locations.
  • In January 2025 alone, pensions worth Rs. 1,710 crore were disbursed to 69.35 lakh pensioners.

Rationalization of PF Damages to Reduce Litigation

To address the issue of litigation arising from imposition of damages for delayed PF remittances, CBT introduced a revised penalty structure:

• A standardized penalty of 1% per month of delay for defaults occurring after June 14, 2024, as per a Gazette Notification.
• Earlier, penalties ranged from 5% for two-month delays to 25% for delays beyond six months.
• The revised policy aims to control litigation and introduce an automatic abatement mechanism for cases where damages are deposited at the new rate.

Approval of EPFO Annual Budget for 2024-25 and 2025-26

The Board approved the Revised Estimates for FY 2024-25 and the Budget Estimates for FY 2025-26 for EPFO and its administered schemes, ensuring financial stability and operational efficiency.

Conclusion

The 237th CBT meeting, chaired by Dr. Mansukh Mandaviya, marked a significant step toward enhancing the financial security of EPF members through higher interest rates, insurance benefits, and pension system improvements. With continued reforms, EPFO aims to streamline operations, reduce litigation, and enhance service delivery for millions of employees and pensioners across the country.