Launched in 1952, EPF, or the Employees’ Provident Fund, constitutes one of the primary social safety nets which has been made accessible to both blue and white collar employees in India. A fund is created by the EPFO (Employees’ Provident Fund Organisation) by taking 12% contributions of the basic and DA from every employee and a matching amount from the employers.
Every year, the EPFO announces a rate of interest on the accumulated money in the EPF account. Since the compounding takes place for a long time – usually 30 years or more – the corpus created at the time of the retirement of the employees is quite substantial. Moreover, any employee who has been a contributor to the EPF for 10 years becomes eligible for a monthly pension from the EPFO that continues for a lifetime, and the spouse and in some cases, the kids get the pension in case the employee expires.
How can I calculate my EPF amount
An online EPF calculator will tell you what is the amount of money that will accumulate in your working life. And since, according to the formula, your basic salary and DA are crucial in determining the amount, the final pool can be substantial if you can begin with a decent figure and can manage a decent salary increment too.
Significant corpus at the time of retirement
For the calculation, let’s make a few assumptions. One, the employee is question begin earning at the age of 25 and continues till 58. He/she works for 33 years. Two, he/she begins with an initial basic salary, or basic salary + DA of Rs 25,000 a month. Three, he/she gets an annual salary hike of 5% — which is not much, considering annual inflation rate to be around 5-6% in India. Fourth, the interest rate allowed on the accumulated corpus is 8.25% (the rate fixed for FY24). With these assumptions, the EPF calculator tells you that an amount of 1,75,58,980 (or Rs 1.75 crore) will accumulate in your EPF account by the time you turn 58. EPFO will also pay a monthly pension on and above this amount.
The significance of EPF (Employees’ Provident Fund) is rising and not without reason. Even if you manage to invest and create wealth, EPF will do so silently, almost imperceptibly. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
