EPF Calculation: The government sets the interest rates for EPF every year. Interest has been set at 8.15 percent per year for the financial year 2023-2024.
Employed Provident Fund (EPF) is a better way for private sector workers to get retirement benefits. In the organised sector, both the employee and the company make contributions to the EPF account of the employee.
This payment is equal to 12–14% of the basic salary (+DA). The government sets the interest rates for the EPF every year. Interest has been set at 8.15 percent per year for the financial year 2023-2024.
EPF is one of these accounts, where a large sum of money builds up over time until retirement.
With a basic salary of 20,000, you can save for retirement.
Let’s say that your basic pay and dearness allowance (DA) add up to Rs 20,000. Your age is 35, and the age of retirement is 58. EPF Calculator says that the annual interest on EPF until retirement is 8.15 percent.
Also, the average increase in salary is 10% per year, so you could have 72.41 lakhs saved up by the time you retire. You can only put money into the EPF scheme until you’re 58 years old.
EPF Calculation 2023
Basic wage plus DA equals 20,000
Age now = 35 years
Age of retirement = 58
Contribution from employees each month = 12%
Employer’s Monthly Payment = 3.67 %
The interest rate on EPF is 8.15 percent per year.
10% salary increase per year
Fund balance at 58 years old = 72.41 crores (The employee’s share is Rs. 25.49 lakhs, and the employer’s share is Rs. 16.36 lakhs. The total amount of money given is Rs. 7.79 lakh.)
(Note: An annual interest rate of 8.15 percent and a salary increase of 10 percent were used for the whole year of contribution.)
Learn the math behind EPF contributions
12 percent of the employee’s basic salary and dearness allowance (dearness allowance) goes into the EPF account. But the employer’s 12 percent is deposited in two parts.
Out of the employer’s 12 percent contribution, 8.33 percent goes to the employee’s pension account and 3.67 percent goes to the EPF account. Employees whose basic pay is less than Rs. 15,000 are required to join this scheme.
PF interest is worked out based on how much money is put into the account every month, which is called the “monthly running balance.”
But it is put into a bank account at the end of the year. EPFO’s rules say that if any money was taken out of the account during the year and the balance was still there at the end of the financial year, interest for 12 months is taken away.
As a disclaimer, the amounts used to figure out the EPF are approximations. The numbers could change if interest rates go up or down, if the retirement age goes up or down, or if the average annual wage growth goes up or down.
Also, Read
With AI on the rise, Indian IT runs into headwinds
Job Cuts: Big update….! Now 30% employees can be fired from this company, know details here
Entire team SACKED! After 4,000 job cuts, THIS company again announces layoffs
