From October 1, 2024, the new minimum wages as declared by the Union Ministry for Labour and Employment has become Rs 20,358 a month for unskilled workers, Rs 22,568 for semi-skilled workers and 24,804 for skilled workers.
It will be interesting to see what corpus EPF will create for an employee who gets the minimum wage at the beginning of their career. For the sake of simplicity, let’s assume that there will be a 5% rise in salary (just about enough to cover for inflation).
EPF for unskilled, semi-skilled workers
First, let’s calculate the corpus for an unskilled worker. If an unskilled worker starts his earning life with a basic + DA of Rs 20,358 at the age of 25 years, the EPF account will have a pool of Rs 1,38,54,289 (Rs 1.38 crore) at the age of 58 years.
Now let a semi-skilled worker begin his/her career at the same age with a salary (basic + DA) of Rs 22,568 per month. The amount that he/she will be getting from the EPF account at 58 will be Rs 1,56,18,106 (Rs 1.56 crore).
Calculation for skilled worker
Since the minimum wage for a skilled worker is Rs 24,804 a month, he/she will run up an amount of Rs 1,74,02,626 (Rs 1.74 crore) by the time he/she reaches the age of 58. As in the earlier instances, let this person begin earning at the age of 25 years.
The point to note in the above calculation is that the rate of interest has been assumed at 8.25%. In our calculation all the three workers have worked for 33 years and have contributed to the EOF account for the entire duration.
Pension
Apart from the lump sum, which is payable at the age of 58, workers get a monthly pension (EPS) too. It is also managed by EPFO (Employees’ Provident Fund Organisation) overall regulation of PFRDA (Pension Fund Regulatory and Development Authority).
The following calculation will show why the Employees’ Provident Fund is a social security that provides significant financial security to all. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
