EPF Calculation: The interest rates of EPF are fixed every year by the government. For the financial year 2022-23, EPF is getting 8.1 percent interest annually. EPF is such an account, in which gradually big corpus is formed till retirement.
EPF Calculation: There is also a retirement benefit scheme for people working in the private sector. This scheme is Employed Provident Fund (EPF). This is for the employees working in the organized sector. Employees Provident Fund Organization (EPFO) manages it. In the EPF account, there is a contribution from both the employee and the employer ie the company. This contribution is 12-12 percent of the basic salary plus dearness allowance. EPF interest rates are fixed every year by the government. For the financial year 2022-23, EPF is getting 8.1 percent interest annually. EPF is such an account, in which gradually big corpus is formed till retirement.
Retirement fund on 10 thousand basic salary
Suppose your basic salary and dearness allowance together is Rs 10,000. If your age is 30 years, then by the time of retirement i.e. by the age of 58 years, you will have a retirement fund of Rs 67.32 lakh ready. Maximum can contribute in EPF scheme till 58 years only.
Understand EPF 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 = 67.32 lakhs
(Employee contribution is 21.40 lakhs and employer contribution is Rs. 6.54 lakhs. Some contribution is Rs. 27.94 lakhs.)
(Note: Annual interest rate of 8.10% and salary growth of 10% have been taken for the entire year of contribution.)
Employer’s contribution in EPF is 3.67%
12 percent of the employee’s basic salary and dearness allowance (dearness allowance) is deposited in the EPF account. But, the 12 percent amount of the employer is deposited in two parts. Out of 12 percent contribution of the employer, 8.33 percent amount is deposited in the employee pension account and the remaining 3.67 percent amount goes to the EPF account.
Understand contribution from 10,000 salary
- Employee Basic Salary + Dearness Allowance = Rs 10,000
- Employee contribution to EPF = 12% of Rs 10,000 = Rs 1200
- Employer’s contribution to EPF = 3.67% of Rs 10,000 = Rs 367
- Employer’s contribution to Pension Fund (EPS) = 8.33% of Rs 10,000 = Rs 833
In this way, the total monthly contribution in the EPF account of an employee with a basic salary of Rs 10,000 in the first year will be Rs 1567 (Rs 1200+367). After this, with an increase in salary by 10 percent on an annual basis, there will be an increase in basic and dearness allowance in the same proportion. Along with which the EPF contribution will increase. It is mandatory for the employees whose basic salary is less than Rs. 15,000 to join this scheme.
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