EPF Calculator: Provident Fund Account is a better saving option for people working in the private sector. Most of the employees working in the organized sector are members of Employees’ Provident Fund Organization (EPFO).
Being an EPFO subscriber means that you will also have an EPF account. Your employer ie the company would have contributed 12 percent of the salary to the Provident Fund on the basis of the basic salary.
Explain that EPFO manages the accounts of crores of account holders. In these accounts, the basic salary and dearness allowance (DA) of both the employee and the company are deposited in 24 percent (12+12) shares. The government fixes interest every year on the amount deposited in the EPF account. At present, the interest available on this is 8.1 percent.
Generally people do not take EPF money very seriously. But the money that is deducted if you keep it till retirement. If you do not withdraw it, a huge fund can be created. This creates a huge corpus for retirement. Also, the magic of compounding interest is such that you can become a millionaire with an investment of 25 years. According to the rules, if there is retirement at the age of 58, then how much money will be in the EPF account? It is from your salary slip that you can understand how much money you will get?
Retirement fund on basic salary of Rs 10,000
Suppose your basic salary and dearness allowance together is Rs 10,000. If you are 30 years old, then by retirement ie by the age of 58, you will have a retirement fund of Rs 67.32 lakhs ready. The maximum contribution that can be made in the EPF scheme is only up to 58 years.
calculation
- Basic Salary + DA = Rs 10,000
- Present age = 30 years
- Retirement age = 58 years
- Employee monthly contribution = 12%
- Employer monthly contribution = 3.67%
- Interest rate on EPF = 8.1% per annum
- Annual salary growth = 10%
- Maturity Fund at the age of 58 years = Rs 67.32 lakh.
EPF contribution can also be increased
If you feel that your money is not enough for retirement planning, then you can also increase your contribution to the EPF fund. However, for this one will have to talk to the HR of the company. If you want, you can also double your contribution. This will give you the advantage that your fund will also double.
