The Employees’ Provident Fund or EPF takes contributions from both the employer and an employee and builds a substantial corpus for the employee which is handed over at the time of retirement. A monthly pension is also paid at the age of 58 or anytime after he/she turns 50, provided the employee has completed 10 years of service life, the minimum service neeed to get pension.
The EPFO 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, powered by the interest that is separately announced every year, help in accumulating a large fund that is payable to the employee on retirement.
Let’s take the help of the EPF calculator to find out the amount of corpus an employee would accumulate. Let’s assume the rate of interest remains constant at 8.25%, the rate paid for FY24.
Starting out with Rs 20,000
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 years. With these assumptions, the amount of money that this employee would get at the age of 58 works out to be Rs 1,35,68,643 or Rs 1.35 crore.
Starting out with Rs 30,000
If someone starts working at the age of 25 with a basic salary (+DA) of Rs 30,000 and gets an annual increment of 5%, the amount of money that will be available at the age of 58 is Rs 2,15,49,312 or Rs 2.15 crore.
Starting out with Rs 40,000
If someone starts working at the age of 25 with a basic salary (+DA) of Rs 40,000 and gets an annual increment of 5%, the amount of money that will be available at the age of 58 is Rs 2,95,30,144 or Rs 2.95 crore.
The Employees’ Provident Fund is India’s one of the earliest and trusted social security schemes that help a worker to have financial security in post-retirement years. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
