The government may announce a cut in the interest rate on money deposited in EPFO, which will affect the retirement savings of 30 crore members. EPFO is facing pressure from increasing claim settlement and falling bond yields, which may lead to a reduction in interest rates.
The government can give a big shock to crores of members of EPFO (Employee Provident Fund Organisation). The government can make a big announcement on Friday regarding the interest rate on EPFO. It is believed that the Central Board of Trustees of EPFO can cut the interest on the money deposited in PF (Provident Fund). This can happen because the stock markets and bond yields have fallen, as well as EPFO is facing more claim settlement.
Considering these reasons, the Central Board of Trustees of EPFO may consider reducing the interest rate for the financial year 2024-25, which will affect the retirement savings of about 300 million (30 crore) EPFO members.
The decision on interest rate will be taken tomorrow (28 February)
The board of EPFO will meet on 28 February 2025 to decide on the interest rate on EPF (Employee Provident Fund). In this meeting, a big decision can be taken on the interest rate on the money deposited in EPF this year, which will directly affect the savings of crores of EPFO members. Last year, the government increased the interest rate on EPF from 8.15 percent to 8.25 percent, but now it is believed that this time the interest rate may be reduced.
Why might interest rates be reduced?
According to a Business Standard report, the EPFO’s investment committee held a meeting last week to discuss the status of EPFO’s income and expenditure. Its purpose was to recommend the interest rate. According to the report, this time the interest rate may be lower than last year. The main reason for this is that bond yields have fallen in recent months. If the government announces a higher interest rate, the EPFO will not have much money left for the retirement fund, as the retirement fund will not have excessive surplus.
Increasing demand for claim settlement
Apart from this, the demand for claim settlement has also increased significantly. The number of claim settlements done by EPFO is increasing, leaving less pool (resources) for the interest to be received on the money deposited for EPF this year. As of January 2024, EPFO has processed more than 5.08 million (50 lakh) claims worth ₹ 2.05 trillion (Rs 2.05 lakh crore). At the same time, more than 44.5 million (45 lakh) claims worth ₹ 1.82 trillion (Rs 1.82 lakh crore) were settled in 2023-24. Due to this increasing demand for claim settlement, EPFO is facing a lot of pressure, which may affect the interest rate.
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