EPF Calculation: The interest rates of EPF are fixed every year by the government. For the financial year 2023-24, 8.15 percent annual interest has been fixed.
EPF Calculation: Employed Provident Fund (EPF) is a better scheme for retirement benefits to private sector employees. In the organized sector, there is contribution from both the employee and the company i.e. in the EPF account of the employees. This contribution is 12-12 percent of the basic salary (+DA). EPF interest rates are fixed every year by the government. For the financial year 2023-24, 8.15 percent annual interest has been fixed. EPF is such an account, in which gradually big corpus is formed till retirement.
Retirement fund on ₹ 20 thousand basic salary
Suppose your basic salary and dearness allowance (DA) is Rs 20,000. Your age is 35 years and retirement age is 58 years. According to EPF Calculator, if the annual interest on EPF till retirement is 8.15%. Also, the average salary growth is 10% every year, so you can have a potential fund of 72.41 lakhs on retirement. You can contribute to the EPF scheme only till the age of 58 years.
EPF Calculation 2023
Basic Salary+DA= ₹20,000
Current Age= 35 Years
Retirement Age= 58 Years
Employee Monthly Contribution= 12%
Employer Monthly Contribution= 3.67%
Interest Rate on EPF= 8.15% p.a. Annual
Salary Growth= 10%
Maturity Fund at age 58 = 72.41 Crore (Employee Contribution Rs 25.49 Lakhs and Employer Contribution Rs 16.36 Lakhs. Total Contribution Rs 7.79 Lakhs.) (
Note: The annual interest rate for the whole year of contribution is 8.15% and the salary growth is 10%.)
Understand the maths of EPF contribution
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. It is mandatory for the employees whose basic salary is less than Rs. 15,000 to join this scheme.
PF Interest calculation is done on the basis of the 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 According to the rules of EPFO, if any amount has been withdrawn during the year from the balance amount as on the last date of the current financial year, interest for 12 months is deducted from it.
(Disclaimer: The funds in the EPF calculation here are approximate. The figures may change due to changes in interest rates, reduction in retirement age or changes in average annual salary growth.)
