The Employees’ Provident Fund or EPF is a tool that takes contributions from both the employee and the employer and build a substantial corpus and a monthly pension at and after retirement respectively. It takes 12% of the Basic Salary and DA (Dearness Allowance) from the employee and a matching amount from the employer. While the entire contribution of the employee is put in the EPF account, 3.67% of the Basic Salary + DA is taken from the employer’s contribution and added to the EPF account.
Over the years, these contributions, aided by the interest that is announced by the EPFO every year, help in accumulating a large fund that is payable to the employee at the age of 58 years.
EPF calculator
Let’s take the help of the EPF calculator to find out the amount of corpus three employees would end up accumulating – one, who starts with a basic salary (+ DA) of Rs 25,000; to, one who starts out with Rs 35,000 and the third starting out with a salary of Rs 50,000. Let’s also assume the rate of interest remains constant at 8.25%, the rate paid for FY24.
EPF investment: Starting out with Rs 25,000
Let him/her start working at the age of 25 and suppose he/she gets increments at 5% throughout the career. The age of retirement is 58 in all the examples. With these assumptions, the amount of money that this employee would get at the age of 58 works out to be Rs 1,75,55,8980 or Rs 1.75 crore.
Starting out with Rs 35,000
If someone starts working at the age of 25 with a basic salary (+DA) of Rs 35,000 and gets an annual increment of 5%, the amount of money that will be available at the age of 58 is Rs 2,55,39,752 or Rs 2.55 crore.
Starting out with Rs 50,000
If someone starts working at the age of 25 with a basic salary (+DA) of Rs 50,000 and gets an annual increment of 5%, the amount of money that will be available at the age of 58 is Rs 3,75,10,804 or Rs 3.75 crore.
EPF calculator: The Employees’ Provident Fund is India’s one of the earliest social security schemes that help a worker to have a certain degree of financial security in the advanced years. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
