In any investment instrument, time is an essential ingredient for growth. Employees’ Provident Fund, or EPF, is no exception. For every employee in India, who works for a firm that employs 20 or more employees, EPF is a legal entitlement. It builds a corpus to be handed over at the time of retirement and it pays a monthly pension from the age of 58.
The corpus is built by contributing 12% from the salary (basic salary + DA) of the employee as well as 3.67% from the employer. An amount of 8.33% of the basic + DA of the employee is also contributed by the employer into an account from where the individual is paid a monthly pension.
EPF calculator
It is clear from the above premise that the more time the EOF account gets, the higher the amount one will get at the time of retirement. However, even if one gets a job in the organised sector of the economy at the late age of 30, one can hope for a significant amount in the EPF account.
EPF corpus of Rs 1 crore
If a person begins working at 30 years and gets a basic salary of Rs 25,000, one can expect an amount of Rs 1,06,00,600 (Rs 1.06 crore). The assumption in this scenario is that the employee gets a salary increment of 5% EPFO (Employees’ Provident Fund Organisation) pays 8.25% interest rate on the amount. This is the rate it paid in FY24.
If the employee turns out to a better performer and gets 10%, the amount amassed in the corpus at 58 is Rs 2,07,27,356. The interest rate assumption remains unaltered.
If you get a job at 35
In the event that one lands a job at 35, and gets the same basic salary + DA of Rs 25,000 a month, the amount accruing in the EPF account is Rs 61,95,088 (Rs 61.95 lakh). The rate of salary increment is 5%.
However, the corpus exceeds Rs 1 crore if the employee can manage a salary increment of 10%. The total amount would rise to Rs 1,08,14,264 (Rs 1.08 crore).
The size of the corpus that EPF creates significantly depends on the time over which it grows. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
