EPF Calculation: Employed Provident Fund (EPF) is a retirement benefit scheme for the salaried employees of the private sector. It is managed by the Employees’ Provident Fund Organization (EPFO). In the EPF account, there is a contribution from both the employer and the employer.
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This contribution is 12-12 per cent of the basic salary plus dearness allowance. The interest rates of EPF are fixed every year by the government. At present, 8.1 percent annual interest (FY23) is there. EPF is such an account, in which gradually large corpus is formed till retirement.
Retirement Fund at ₹15,000 Basic Salary
Let’s say your basic salary and dearness allowance together is Rs 15,000. If you are 21 years old, then you can have a retirement fund (EPF Corpus) of Rs 1.26 crore by the time you retire through EPF i.e. by the age of 58. In this, the condition will be that the interest on EPF remains 8.1 percent till retirement and annual salary growth of 5 percent remains. Changes in this may result in change in retirement corpus. The maximum contribution that can be made in the EPF scheme is up to 58 years.
Check EPF Calculation
Basic Salary+DA= ₹15,000
Current Age= 21 Years
Retirement Age= 58 Years
Employee Monthly Contribution= 12%
Employer Monthly Contribution= 3.67 percent
Interest Rate on EPF= 8.10%
Annual Salary Growth= 5%
Maturity Fund at 58 Years = 1.26 crore (Employee contribution is Rs 23.26 lakh and Employer contribution is Rs 7.11 lakh. That is, some contribution is Rs 30.38 lakh.)
(Note: Annual interest rate is 8.1 per cent and salary growth is 5 per cent for the whole year of contribution.)
Employer’s entire 12% does not go towards EPF
12% of the basic salary and Dearness Allowance (Dearness Allowance) of the employee is deposited in the EPF account. But, the employer’s 12 percent amount is deposited in two parts. Out of 12 per cent contribution of the employer, 8.33 per cent is deposited in the Employee Pension Account and the remaining 3.67 per cent goes into the EPF account.
Understand contribution from ₹15,000 salary
Employee Basic Salary + Dearness Allowance = Employee Contribution in ₹15,000
EPF = 12% of ₹15,000 = Employer Contribution in ₹1800
EPF = 3.67% of ₹15,000 = ₹550.5
Employer’s Contribution to Pension Fund (EPS) 8. 33 ₹ 15,000 Contribution %= ₹1249.5
In this way, the total monthly contribution in the EPF account of an employee with a basic salary of Rs 15,000 in the first year will be Rs 2350 (Rs 1800 + 550). After this, the basic and dearness allowance will increase in the same proportion with a 5% increase in the salary on an annual basis. With which the EPF contribution will increase. It is mandatory for the employees whose basic salary is less than Rs 15,000, it is mandatory to join this scheme.
(Note: This figure for Retirement Fund through EPF Contribution has been taken on fixed interest rate, salary growth and employee and company contribution. This is only an estimate. The corpus may vary due to change in figures.)
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