EPFO Interest Rate: A portion is deducted towards the pension; is interest earned on that as well, alongside the PF?

EPFO Interest Rate: Employees covered under the EPFO ​​often have various questions—ranging from money withdrawal to pension-related matters. Essentially, the PF contribution is split into two parts: the employee's entire share goes into the EPF, while the employer's share is divided between the EPS (Employee Pension Scheme) and the EPF. The government pays annual interest on these deposits. The Union Ministry of Labour and Employment determines the EPFO ​​interest rates.

The EPFO ​​has not changed the interest rates for the 2025-26 fiscal year either; employees will continue to receive an interest rate of 8.25%, just as they did in 2024-25. Interest is typically credited to accounts during June and July. However, the interest for FY26 has not yet been credited to PF accounts. Amidst this, a question arises: is interest earned on the money deposited into the pension fund as well? Let’s find out.

Is interest earned on pension deposits under the EPFO?
To clarify whether interest is earned on the pension component, we spoke to Sushil Jain, Founder and CEO of Personal CFO Consultant LLP.

Sushil Jain explained that the government does not pay interest on the EPS portion. That amount simply accumulates and eventually forms the basis of your pension—provided you have completed 10 years or more of service. You do not receive a pension for a shorter tenure; instead, you can withdraw that money. The government pays interest only on the EPF portion of the PF contribution.

He further explained that the company deposits a part of the PF contribution into your EPS account, specifically allocating 8.33% of its total contribution to it.

To find answers to other questions regarding the EPFO, you can read the Jagran Business story linked below. In that article, we asked experts 10 questions about the EPFO ​​that commonly cause confusion.

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