NewsStocksIndia fixes 7.1% interest on special deposit scheme for provident, superannuation, and gratuity fundsIndia fixes 7.1% interest on special deposit scheme for provident, superannuation, and gratuity funds
The Ministry of Finance has set a 7.1% interest rate for the Special Deposit Scheme covering non-government provident, superannuation, and gratuity funds for January-March 2026. The scheme enables private organizations to invest employee benefit funds in government securities, providing risk-free returns with quarterly rate reviews. This framework ensures secure investment of retirement funds while offering fixed returns compared to market-linked alternatives.
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The Ministry of Finance has announced that deposits under the Special Deposit Scheme (SDS) for non-government provident, superannuation, and gratuity funds will carry an interest rate of 7.1% for the period from January 1 to March 31, 2026. The notification was issued by the Department of Economic Affairs, referencing an earlier notification from 1975, and signed by Vyasan R, Joint Secretary of the Ministry of Finance.
Special Deposit Scheme Overview
The Special Deposit Scheme allows non-government organisations and private companies to invest funds accumulated under various employee benefit schemes with the government. These schemes are designed to ensure secure and regulated investment of retirement and employee benefit funds while providing a fixed rate of interest. Under the SDS, these funds can be invested in government securities for assured returns, offering a risk-free avenue compared to market-linked investments.
| Scheme Details: | Information |
|---|---|
| Interest Rate: | 7.1% |
| Applicable Period: | January 1 to March 31, 2026 |
| Review Frequency: | Quarterly |
| Investment Type: | Government Securities |
| Risk Level: | Risk-free |
Covered Fund Types
The scheme encompasses three primary categories of employee benefit funds, each serving distinct purposes in retirement and employment benefit planning.
Provident Fund (PF) operates as a retirement savings scheme where employees contribute a portion of their salary, matched by employer contributions, to accumulate funds for post-retirement use. Superannuation Fund functions as an employer-managed retirement benefit scheme that pays employees a lump sum or pension upon retirement. Gratuity Fund serves as a statutory benefit under the Payment of Gratuity Act, providing a lump sum to employees on resignation, retirement, or death after completing a minimum period of service.
Investment Framework
The government fixes interest rates quarterly under the SDS framework, ensuring regular review and adjustment of returns. The current 7.1% rate represents the applicable rate for the first quarter of 2026, providing certainty for fund managers and beneficiaries planning their investment strategies. This quarterly review mechanism allows the government to align rates with prevailing economic conditions while maintaining the scheme's attractiveness as a secure investment option for employee benefit funds.
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