EPFO Expected to Offer 8.5% Interest Rate on Retirement Savings, Ponders Portfolio Diversification and Manager Hires

Employees' Provident Fund Organisation (EPFO) to Enhance Returns

The EPFO has a sufficient surplus in its investible corpus to sustain crediting 8.25 percent interest to its subscribers' accounts for the next 2-3 years. However, the organization aims to increase returns and is taking proactive measures to achieve this goal.

EPFO's Investible Corpus

The total investible corpus of EPFO stands at Rs 17.46 lakh crore. Currently, the allocation is as follows:

• 41 percent in State Development Loans (SDL)
• 16 percent in central government securities
• 16 percent in corporate bonds
• 9.5-9.9 percent in Exchange-Traded Funds (ETFs)

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Diversification and Hiring of Fund Managers

To increase returns, EPFO plans to diversify its investment portfolio and hire more fund managers. Two additional fund managers will be hired from April, bringing the total to four. The existing 10 percent limit for investments in ETFs will be increased to 15 percent.

Approved ETFs and Potential Expansion

EPFO has approved two ETFs: CPSE and Bharat 22. These funds provided an extended internal rate of return (XIRR) of 20.5 percent and 17.5 percent, respectively, in 2025-26. The organization plans to include more ETFs in its portfolio after thorough deliberations, starting from the next financial year.

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