GPF interest rate steady at 7.1% for Q2 FY26, EPF offering higher returns

Government employees who rely on the General Provident Fund (GPF) for their retirement savings will see no change in interest rates during the second quarter of the fiscal year 2025-26. A notification from the Department of Economic Affairs dated July 2, 2025, confirmed that the interest rate would remain at 7.1% for the period from July 1 to September 30, 2025. This fixed rate applies to several similar funds, including the Contributory Provident Fund and the Indian Ordnance Department Provident Fund, among others.

In contrast, private sector employees under the Employees’ Provident Fund (EPF) scheme are experiencing higher returns, with the Employees’ Provident Fund Organisation (EPFO) crediting an interest rate of 8.25% for the fiscal year 2025. Although there has been no formal announcement, several EPF subscribers have reported the updated interest entries in their passbooks. This divergence in rates accentuates the differences between the GPF and EPF benefits.

The GPF and EPF are two major retirement savings schemes in India, each catering to distinct sectors. The GPF is exclusive to central and state government employees who joined service before 2004, while the EPF is mandatory for employees in the organised private sector. This difference in eligibility underscores the distinct paths for retirement savings between public and private sector employees.

Contributions to these funds vary significantly. GPF participants are required to contribute at least 6% of their salary, with the option to contribute up to 100%. Conversely, EPF contributions are split equally between employees and employers, each contributing 10% of the employee’s salary, following an amendment in April 2021 that reduced the rate from 12%. This shared responsibility in the EPF can be seen as an advantage, providing a balanced approach to retirement savings.

Regarding access to funds, GPF subscribers have the flexibility to take loans against their balances at any time during their service, whereas the EPF allows partial withdrawals only under specific conditions such as purchasing a home, medical emergencies, or extended unemployment. GPF matures upon retirement, while EPF matures when a subscriber reaches 58 years of age. This flexibility in the GPF can be particularly beneficial for those needing immediate financial assistance.

These funds are governed by different authorities: the GPF by the Department of Pension and Pensioner’s Welfare and the EPF by the EPFO under the EPF and Miscellaneous Provisions Act, 1952. This administrative separation reflects the broader structural differences in how retirement savings are managed in India, highlighting the tailored approaches to meet the needs of diverse employee groups.

For savers, the unchanged GPF interest rate offers stability and predictability for government employees, while private sector employees benefit from the EPF’s linkage to broader market earnings. As India’s economic environment evolves, these plans remain essential tools for workers in planning their financial futures. The contrasting features of GPF and EPF underscore the importance of understanding one’s retirement plan to maximize benefits effectively.