EPFO Retirement Plan: If you work in an organized sector, then most of the private sector employees will get many benefits after retirement, which you should know about. Notably, unlike their counterparts in the commercial sector, government employees are also eligible for pension.
The Employees Provident Fund was established after the EPF Act was passed in the Parliament. As per the law, the Employees’ Provident Fund Organization of India (EFPO) is in charge of the money that both the employee and the employer put into a permanent account that is named as a UAN (Unique Account Number). You can effectively evaluate your savings with the help of EPF calculator.
Money is guaranteed
Provident Fund is very helpful in taking future financial decisions as it guarantees future prosperity or even money in case of job loss.
Employees covered by the EPF system contribute a fixed amount of 12% of their basic pay and dearness allowance. Then, the employer also contributes an equal 12%, of which 8.33% goes to EPS and 3.67% to the employee’s EPF account. Keep in mind that the employer should also make an equal contribution to the EPF scheme.
After consulting the Finance Ministry, the EPFO Central Board of Trustees decides the EPF interest rates. For the financial year 2022-2023, the EPF interest rate is set at 8.15%.
How does EPF calculator work?
Let us understand this with an example: Suppose the salary of an employee is 1,00,000 including DA. The employee’s contribution towards his EPF is 12% i.e. 12,000. Now, the employer contributes 3.67% i.e. 3,670 and the employer contributes to EPS which is 8.33% of 40,000, which works out to 8,330.
In this case, the total contribution of the employer and the employee in the EPF account of the employee will be Rs 15,670. The applicable interest rate for each month will be 8.15%/12 = 0.679%. Similarly, the total contribution for the month comes to Rs.15,670.
