The Employees’ Provident Fund Organisation (EPFO) is looking to implement important reforms, notably a hike in the Provident Fund (PF) interest rate and a hike in the salary limit for mandatory enrolment in EPF and EPS.
There is a big piece of good news for crores of private sector employees in India. The Employees’ Provident Fund Organisation (EPFO) is looking to implement important reforms. Most notably, it may increase the interest rate on Provident Fund (PF) and increase the salary limit for mandatory enrolment in EPF and EPS. If these changes are implemented, more employees will be eligible for PF and pension benefits. This will help them increase their retirement savings and monthly pension amount. Currently, employees who have completed 10 years of service are eligible to take pension after crossing the age of 58.
Interest rate hike to 9.25 percent?
The current PF interest rate for the financial year 2024-25 is 8.25 percent. This rate has not changed since last year. It seems that the EPFO is considering a proposal to increase the interest rate to 9.25 percent in the financial year 2025-26. This is one percent higher than the current rate. The final decision on this increase is likely to be taken in the Central Board of Trustees (CBT) meeting to be held next January. After that, the Union Finance Ministry will have to approve it. This higher rate will benefit more than 7 crore EPF members.
The profit that will increase
If the interest rate increases to 9.25 percent, employees who have saved a large amount of money in the provident fund will get good returns. For example, if an employee has a PF balance of Rs. 6 lakh, he will get about Rs. 55,000 in interest at the new rate of 9.25 percent. At present, the rate of 8.25 percent is less than this. This will be very useful for the financial planning of employees and the pension fund in the long run.
How is PF divided?
As per the current rules, 12 percent of an employee’s basic salary and dearness allowance are deducted for PF. 12 percent on behalf of the employee and 12 percent on behalf of the company are deposited with the regional PF commissioner. Out of the 12 percent contributed by the company, 8.33 percent goes to the Employees’ Pension Scheme (EPS). Only the remaining 3.67 percent goes to the Provident Fund (EPF). There is a limit to the pension component contributed by the company. This is intended to keep the fund sustainable for a long time.
Balance limit increase
Currently, it is mandatory for employees earning less than Rs 15,000 per month to join EPF and EPS. The EPFO is also reportedly considering increasing this salary limit. If this revision is approved, more employees will automatically become eligible for PF and pension benefits. This will increase retirement security, especially for employees with mid-level salaries.
How to check PF balance?
Missed Call Service: Give a missed call to 011-22901406 from the mobile number registered with your UAN. You will immediately get the balance via SMS.
Umang App: You can log in to the Umang app and view the details in the EPFO service section.
SMS: You can find out by sending an SMS from your registered mobile number to a special EPFO number.
EPFO Office: You can visit the nearest EPFO office and get an updated passbook.
