EPF Calculation: The interest rates of EPF are decided every year by the government. For the financial year 2023-24, the interest rates of EPF have been fixed at 8.25 percent per annum.
EPF Calculation: Employees’ Provident Fund (EPF) is a retirement scheme for employees working in the private sector. Salaried employees of the organized sector get its benefit. The Employees’ Provident Fund Organization (EPFO) manages it. Both the employee and the employer (company) contribute to the EPF account. This contribution is 12-12 percent of the basic salary plus dearness allowance (DA). The interest rates of EPF are fixed every year by the government. For the financial year 2023-24, the interest rates of EPF have been fixed at 8.25 percent per annum.
Retirement fund on ₹ 12,000 salary
EPF is an account in which a large corpus is formed gradually till retirement. Suppose your basic salary (+DA) is Rs 12,000. If you are 25 years old, then by the time of retirement i.e. by the age of 60, you can have a retirement fund of about Rs 87 crore. The calculation of this fund is based on 8.25 percent annual interest rate and an average 5 percent annual salary increment. The figures may change if interest rates and salary increment change.
Understand EPF calculation
Basic salary + DA= Rs 12,000
Current age= 25 years
Retirement age= 60 years
Employee monthly contribution= 12%
Employer monthly contribution= 3.67%
Interest rate on EPF= 8.25% p.a.
Annual average salary growth= 5%
Thus, maturity fund on retirement = Rs 86,90,310 (total contribution in this is Rs 21,62,568. While the interest is Rs 65,27,742.)
Employer’s 3.67% contribution in EPF
12% of the employee’s basic salary (+DA) is deposited in the EPF account. However, the employer’s 12% amount is deposited in two parts. Out of the employer’s 12% contribution, 8.33% is deposited in the employee pension account and the remaining 3.67% goes to the EPF account. It is mandatory for employees whose basic salary is less than Rs 15,000 to join this scheme.
(Note: The above figure regarding EPF corpus is a calculation. These are not actual figures. It may change based on the salary, age, interest rate and annual salary increment of the employees.)
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