EPF calculation: ₹10,000 basic salary, age 30; How many lakhs will you own on retirement?

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EPF Calculation: Planned Provident Fund (EPF) is a retirement benefit scheme for private sector employees. Contribution is made to the EPF account by both the employee and the company.

This contribution is 12-12 percent of the basic pay (+DA). EPF interest rates are fixed by the government every year. The interest rate of EPF for the financial year 2022-23 is 8.15 percent per annum. Employees’ Provident Fund Organization (EPFO) manages the EPF account. EPF is an account in which a large amount is gradually deposited till retirement.

30 years old, ₹10,000 basic salary

Let the basic pay (+DA) be Rs.10,000 and the age be 30 years. The retirement age is 58 years. So you have 28 years to contribute. According to the EPF calculator, if PF is calculated on this basis till retirement, a fund of around Rs 67 lakh will be generated. In this, 10 percent annual increment has been included every year.

EPF Calculation: Understand like this

Basic Pay+DA= ₹10,000
present age = 30 years
Retirement age = 58 years
Employee monthly contribution = 12%
Employer’s monthly contribution = 3.67%
Interest rate on EPF = 8.15% p.a.
increment = 10%
Fund maturity at age 58 years = Rs 67.75 lakh (Employee’s contribution was Rs 21.40 lakh and employer’s contribution was Rs 6.54 lakh. Thus, the total contribution was Rs 27.95 lakh.)

(Note: The annual interest rate for the entire year of contribution has been considered to be 8.15 percent.)

Understand the details of EPF contribution

12 percent of the employee’s basic salary and dearness allowance (DA) is deposited in the EPF account. But, the employer’s 12 percent amount is deposited in two parts. Of the 12 percent employer contribution, 8.33 percent is deposited in the employee pension account and the remaining 3.67 percent goes to the EPF account. It is mandatory for employees whose basic salary is less than Rs 15,000 to join this scheme.

How is interest calculated?

Interest is calculated on the basis of money deposited in the PF account every month i.e. monthly running balance. But, it is deposited at the end of the year. According to EPFO ​​rules, if any amount is withdrawn during the year from the amount remaining on the last date of the current financial year, then 12 months’ interest is deducted on it. EPFO always takes the opening and closing balance of the account. To calculate this, the monthly current balances are added and multiplied by the interest rate/1200.

(Disclaimer: The EPF calculation fund here is approximate. The figures may change due to change in interest rates, reduction in retirement age or change in average annual salary increase.)

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