EPFO Pension Calculator: EPFO also gives guaranteed returns year after year, so that you can accumulate a good fund for retirement.
EPFO Pension Calculator: Investment planning should be started from today itself so that life after retirement is comfortable. Through investment, we all want to raise a good amount of funds for our retirement so that we do not have to face financial crisis at that time. EPF (Employees’ Provident Fund) is a great option for you. It is not only safe but also gives you good returns.
No matter how low your salary is, you can also create a strong retirement fund through EPF. You can create a big retirement fund for yourself even with a basic salary of Rs 10,000.
Guaranteed return on EPFO investment
Although there are many investment and retirement schemes available in the market, but no scheme can compete with the facilities available on the Provident Fund of EPFO (Employees’ Provident Fund Organisation). Because not only are EPFO’s interest rates better than other savings schemes, but EPFO also gives guaranteed returns year after year, which can help you accumulate a good corpus for retirement.
Although there are many market-linked schemes that can give higher returns than EPF, they also have many uncertainties associated with them and they cannot guarantee a large fund by the time you retire.
How does the EPFO scheme work for employees?
Under the EPFO scheme, the company deducts 12% every month from the employee’s basic salary and the company also contributes the same amount. Out of the company’s contribution, 8.33% goes to the employee’s pension scheme, while 3.67% goes to the employee’s Provident Fund.
Who can avail EPF?
To avail the benefit of EPF, you have to fulfill certain eligibility criteria. Formal sector organizations with 20 or more employees are required to register with the EPFO. However, organizations with less than 20 employees can voluntarily register with the EPFO. All salaried employees are eligible for EPF. Notably, employees earning less than Rs 15,000 per month are required to register for the EPF scheme, while those earning more than Rs 15,000 can opt for the EPF scheme on a voluntary basis.
When can you claim EPF?
An employee can use the accumulated EPF funds on his retirement or while leaving the service, provided he meets the required criteria. In case of the death of the employee, dependents get the benefit of EPF.
Let us know how a retirement fund of Rs 2 crore can be created from a basic salary of Rs 10,000.
Suppose an employee is 23 years old and his basic salary is Rs 10,000 out of a total salary of Rs 40,000. The current interest rate of EPF is 8.25%. The employee expects a 10% increase in his salary every year till the age of 60 i.e. till retirement. So in this context, how much will the employee contribute to EPFO in the next 37 years?
According to EPFO rules, the employee contributes 12% of his basic salary, which is Rs 1,200 every month. The company also contributes the same amount. Out of the company’s contribution of Rs 1,200, Rs 367 will be added to the employee’s EPF fund. In this way, the total monthly contribution to the EPF fund will be Rs 1,567, and this amount will increase by 10% every year. Apart from this, out of the company’s contribution, Rs 833 goes to the employee’s pension scheme (EPS).
Age of employee: 23 years
Years of service: 37 years (till retirement at the age of 60)
Total monthly contribution: Rs 1,200 (by the employee) + Rs 367 (by the company) = Rs 1,567
Annual salary increment: 10%
As per this, in 37 years, the total deposit amount is Rs 68,46,018.
The total interest received on this amount is Rs 1,30,08,857.
The total corpus or maturity amount after 37 years will be Rs 1,98,54,875.
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