EPFO Recommends 8.25% Interest for FY26; Major Social Security Reforms and Digital Overhaul Approved at 239th CBT Meeting

After detailed deliberations, the CBT recommended an annual interest rate of 8.25% on EPF accumulations for the financial year 2025–26.

 

Union Minister for Labour & Employment and Youth Affairs & Sports, Dr. Mansukh Mandaviya, chaired the 239th meeting of the Central Board of Trustees (CBT), Employees’ Provident Fund (EPF) in New Delhi today, steering a series of significant decisions aimed at strengthening retirement security, modernizing governance, and aligning India’s social security architecture with the Code on Social Security, 2020.

The meeting was attended by Vice-Chairperson Sushri Shobha Karandlaje, Co-Vice-Chairperson Ms Vandana Gurnani, Secretary (Labour & Employment) and Member Secretary Shri Ramesh Krishnamurthi, and the Central Provident Fund Commissioner, among other senior officials.

8.25% Interest Rate Recommended for FY 2025–26

After detailed deliberations, the CBT recommended an annual interest rate of 8.25% on EPF accumulations for the financial year 2025–26. The rate will be officially notified by the Government of India, following which the Employees’ Provident Fund Organisation (EPFO) will credit the interest to subscribers’ accounts.

Despite global economic uncertainties, EPFO has maintained financial discipline and ensured stable, competitive returns without straining its interest account. The decision benefits crores of workers by strengthening retirement security while reaffirming EPFO’s ability to safeguard contributions and deliver sustainable returns compared to similar investment avenues.

EPFO has consistently declared interest rates above 8% in recent years, supported by robust returns from equity exchange-traded funds (ETFs) and diversified investments, reflecting the strong credit profile of its portfolio.

Amnesty Scheme for Exempted Establishments

In a major compliance reform, the Board approved a one-time Amnesty Scheme for income tax-recognized trusts yet to be covered or granted exemption under the EPF & MP Act, 1952, in light of the Finance Act, 2026.

Key features of the scheme include:

• A defined six-month compliance window

• Waiver of damages, interest, and penalties for trusts providing benefits equal to or better than statutory norms

• Retrospective relaxation or exemption subject to conditions

• Protection of statutory benefits for eligible employees

The measure is expected to resolve over 100 active litigation cases and benefit thousands of trust members, while protecting workers’ interests.

Simplified SOP for EPF Exemption

The Board approved a consolidated and simplified Standard Operating Procedure (SOP) on EPF Exemption, merging four existing SOPs and the Exemption Manual into a single framework.

The new system introduces:

• End-to-end digital processing

• Online surrender and transfer of past accumulations

• Risk-based online audits

• Transparent and paperless compliance

The reform is expected to reduce compliance burdens, improve audit transparency, and promote ease of doing business.

Transition to Code on Social Security, 2020

A landmark decision was taken to notify new social security schemes aligned with the Code on Social Security, 2020:

• Employees’ Provident Fund Scheme, 2026

• Employees’ Pension Scheme, 2026

• Employees’ Deposit Linked Insurance (EDLI) Scheme, 2026

These will replace the current schemes, creating a legally robust and modernized framework for administering provident fund, pension and insurance benefits.

The transition enables operationalization of previously approved reforms, including:

• Alternative Dispute Resolution (ADR/VISHWAS) mechanism

• Member-friendly advances and withdrawal reforms

• Administrative simplifications to enhance ease of compliance and service delivery

This marks a significant step in modernizing India’s social security architecture.

EPFO Annual Report 2024–25 Approved

The CBT approved EPFO’s Annual Report for 2024–25 for tabling in Parliament.

Key highlights:

• Total contributions: ₹3,35,628.81 crore

• 2,86,894 new establishments covered

• 1,22,89,244 new members enrolled

• 81,48,490 pensioners served

• 6,01,59,608 claims settled (including 69,983 EDLI claims)

• 17,33,046 grievances redressed

• 39,74,501 calls attended

• Interest rate for FY 2024–25 declared at 8.25%

The report also documents expansion of coverage, digitization initiatives, and service delivery improvements.

Digital Reforms and Governance Milestones

During FY 2024–25, EPFO implemented several transformative measures:

• Nationwide rollout of Centralised Pension Payment System (CPPS)

• Digital Life Certificate submission via Facial Authentication Technology (FAT)

• Amendment to EPS 1995 allowing withdrawal benefits after one month of contribution

• Enhanced EDLI benefits (₹2.5 lakh to ₹7 lakh for continuous 12-month employment)

• Uniform penal damages rate of 1% per month (effective 14 June 2024)

• Seven ISSA Good Practice Awards (Asia & Pacific, 2024)

EPFO also introduced multiple IT-enabled citizen-centric measures, including simplified claims processing, UAN corrections, online transfers, exemption surrender systems, and streamlined joint declarations.

Auto-Settlement of Inoperative Accounts

The Board approved a pilot project to auto-initiate claim settlement for inoperative accounts with unclaimed balances of ₹1,000 or less.

In Phase I:

• 1.33 lakh accounts

• ₹5.68 crore total balance

Funds will be directly credited to Aadhaar-seeded bank accounts without fresh claims or documentation. The facility will later expand to higher-balance accounts, enhancing member-centric service delivery.

Investment Governance Strengthened

With a consolidated corpus exceeding ₹28.34 lakh crore as of March 2025, the Board approved:

SOP on Corporate Actions

• Structured, time-bound response framework

• Strengthened Investment Monitoring Cell (IMC) oversight

• Safeguards against reinvestment and interest rate risks

• Clear audit trail

SOP for Equity ETFs and Liquid Mutual Funds

• Annual SIP approach

• Defined entry/exit protocols

• Exposure limits and compliance controls

• Liquidity management through regulated LMF deployment

• Multi-layered audit oversight

These measures aim to optimize returns within prudent risk parameters while safeguarding members’ long-term interests.

International and Administrative Developments

India–UK Double Contributions Convention (DCC)

For the first time, a DCC Agreement was negotiated under the Comprehensive Economic and Trade Agreement (CETA). Signed on 24 July 2025, it reduces social security contribution burdens for Indian professionals and employers in the UK, improving competitiveness.

IBPS to Conduct EPFO Examinations

The Board approved the Institute of Banking Personnel Selection (IBPS) to conduct direct recruitment and promotion examinations, ensuring transparency and timely filling of vacancies.

Pension on Higher Wages Update

Following the Supreme Court judgment of 04.11.2022:

• 17.49 lakh applications filed

• 15.24 lakh disposed as of 23.02.2026

J&K EPFO Absorption

The Board reaffirmed the absorption framework for erstwhile J&K EPFO employees into Central EPFO, resolving promotion, seniority and pension liability issues.

EPFO 2.01: Digital Transformation Under CITES

Under the Centralized IT Enabled System (CITES 2.01), EPFO is transitioning from decentralized databases to a centralized architecture within the Unified Portal.

Key progress:

• Infrastructure fully deployed

• 700+ issues resolved during UAT across 19 offices

• 99.5% data migration accuracy

• Enhanced automation, transparency and pension disbursement

• SOC integration and VAPT audits completed

• Phased rollout underway

This initiative marks a decisive shift toward a fully digital, transparent and centralized social security platform.

A Modernized Social Security Architecture

The 239th CBT meeting signals a comprehensive push toward:

• Stronger retirement security

• Transparent and accountable fund management

• Digital-first governance

• Global social security coordination

• Legal alignment under the Code on Social Security

With expanded coverage, robust financial management, and technology-driven reforms, EPFO is positioning itself to serve crores of workers more efficiently while safeguarding long-term financial stability.