The Employee Provident Fund (EPF) was established following Parliament's approval of the EPF Act. Similar to government employees, private sector workers are eligible for post-retirement benefits. The Employees Provident Fund Organisation of India (EFPO) is responsible for the funds the employer and the employee deposit in a permanent account. To help employees across sectors, the EFPO developed an EPF calculator for calculating employees' savings accurately. The PF calculator uses proprietary technology to always return the correct total after data entry. The provident fund guarantees future prosperity or job loss, which makes it very helpful for financial decisions in the future.
- EPF Corpus (at retirement)
The Employee Provident Fund (EPF) is a retirement savings scheme administered by the Employees' Provident Fund Organization (EPFO) in India. It is a statutory body of the Government of India under the Ministry of Labor and Employment. The EPF is a savings scheme that is designed to help employees save a portion of their income for their retirement years. Under the EPF, employees contribute a certain percentage of their salary towards their EPF account, and their employer also contributes. The EPF account earns interest, and the employee can withdraw the balance upon retirement or in certain cases of financial hardship.
The EPF is an important social security measure that helps to ensure that employees have a secure source of income during their retirement years.
The Employee Provident Fund (EPF) is a scheme for salaried employees to have a financially sound life after retirement. The Employees Provident Fund Organization (EPFO) oversees the EPF. It covers any organization with 20 or more employees. The Employees Provident Fund Organization runs three different programs.
The EPF Scheme 1952
The Pension Scheme 1995
The Insurance Scheme 1976
Employees who fall under the EPF scheme contribute 12% of their basic pay and dearness allowance to the program. The employer must contribute equally to the EPF plan. Before deciding on the EPF interest rates, the EPFO Central Board of Trustees consults with the Ministry of Finance. For FY 2022, the EPF Interest Rate is set at 8.1%.
At retirement, the employee would receive a lump-sum payment, including their and the employer's contributions and interest payments.
Every employee whose base pay is less than Rs 15,000 per month must enroll in the EPF. Also, it is important to note that once you enroll in the EPF program, you cannot leave it. Employees may contribute more to the voluntary provident fund, up to 100% of their base pay. In such cases, the employer is not liable in a similar manner.
An EPF calculator is a tool that allows you to calculate the amount of money that you will have in your Employee Provident Fund (EPF) account at the time of your retirement. It helps you understand how much you need to contribute towards your EPF account to achieve your retirement savings goals.
To use an EPF calculator, you will need to input certain information, such as your current age, the age at which you plan to retire, your current salary, and the percentage of your salary that you contribute towards your EPF account. The calculator will then use this information to estimate the amount of money you will have in your EPF account at the time of your retirement based on the current interest rate.
Although primarily, EPF calculators are useful tools for employees who want to plan for their retirement and understand how much they need to save to achieve their retirement goals. EPF Calculator can also be helpful for employers who want to understand the benefits of offering an EPF plan to their employees and how it can help to attract and retain talent.
The EPF calculator shows a simulation of your potential retirement benefits in approximate numbers. EPF amount includes your contribution, as well as the employer's contribution. Therefore, enter details like:
- Your current age,
- Basic monthly salary,
- Dearness allowance,
- EPF contribution, and
- Retirement age
The current EPF balance can also be entered if you are familiar with numbers. Once you have entered the necessary information, the EPF calculator reflects the EPF funds that will be accessible to you upon retirement. EPF calculation is quite difficult. However, the EPF calculator is a simple tool for accumulating the lump-sum EPF amount.
The Employee Provident Fund (EPF) calculator aids in calculating your corpus when you retire. Use the EPF calculator on 5 Paisa to calculate your employer's contribution to your EPF account and the current balance of your EPF account or pension fund account. In addition, factor in a growth rate for your salary that you anticipate until retirement, enabling you to increase your EPF contribution each year. Every year, the EPF interest rate is revised, and you can adjust it to fit your financial goals.
Accessing and using our EPF calculator is very simple. Enter the values, and the output will appear shortly.
Step 1: Submit your age and basic salary information.
Step 2: The employer's contribution (EPS+EPF), total interest earned, and total maturity amount will all be reflected in the results as soon as you input the values.
Formula to calculate EPF amount with example
The EPF calculator is a simulation that shows the total amount in your EPF account at retirement. Enter your basic monthly salary + the dearness allowance, your current age, your contribution to the EPF, and your age of retirement age in the formula box.
Components of the EPF formula:
1. Employee Contribution
This is your contribution to your EPF retirement account. The EPF receives the 12% employee contribution directly.
2. Employer Contribution
The employer's contribution, however, is split between the EPS and the EPF. The EDLIS, EPF admin fees, and EDLIS admin fees are three additional expenses the employer is also responsible for paying. Employer contributions are split into: 3.67% into EPF, 8.33% into EPS, 0.5% into EDLIS, 0.85% for EPF Administrative Charges, and 0.01% for EDLIS Administrative Charges.
3. Growth Rate in EPF
Enter the percentage you anticipate your salary increasing. This will consequently increase your EPF contribution.
4. Rate of Interest
You can enter either the current EPF interest rate or the rate at which you anticipate your EPF will generate returns.
5. Current Pension Fund Balance
Your EPF Passbook, a component of the Employees' Pension Scheme (EPS), contains information about your pension fund balance.
Here's an example:
- Employees basic salary + dearness allowance = Rs 15,000
- Employees contribution towards the EPF = 12% * 15,000 = Rs 1,800
- Employers contribution towards the EPF = 3.67% * 15,000 = Rs 550
- Employers contribution towards EPS = 8.33% * 14,000 = Rs 1,249.
The total contributions made by the employer and employee to the employee's EPF account are Rs. 1,800 + Rs. 550, or Rs. 2,350.
The interest rate for FY 2022-23 is 8.1%. Thus, monthly interest will be - 8.1%/12 = 0.675%
Considering the worker started with Company E in June 2022. For June, there will be a total EPF contribution of Rs 2,350.
July's total EPF contribution was Rs 4,700 (Rs 2,350 plus Rs 2,350). The interest of Rs. 4,700 multiplied by 0.675% or Rs. 31.75 is paid to the employee.
As in July, the rest of the months will add up to the total EPF fund.
The regular contributions made by both you and your employer result in the balance of your EPF account. The balance of your EPF account is available online, via SMS or a missed call, or via a mobile app. There are several EPF calculators in the market.
Here are key points that distinguish the 5 paisa's EPF calculator from others:
Starting with the most well-liked quality—user-friendliness. The EPF Calculator is simple to use and provides a quick estimate of your retirement EPF fund.
The EPF Calculator then displays the full amount of your retirement EPF fund. You get a sense of the retirement fund, which aids in more accurate future financial planning.
If your retirement income isn't enough to cover your needs, you can increase your contribution percentage to retire with more money. Additionally, you can use 5 paisa's EPF calculator to determine how much to increase.
The calculator helps you understand your future financial situation and prepare for unforeseen financial crunches.
Frequently Asked Questions
Calculating PF amount is now easy, thanks to EPF calculators. All you need to enter is your basic monthly salary + the dearness allowance, your current age, your contribution to the EPF, and your retirement age.
The employee makes a monthly contribution of 12% of their basic salary plus the Dearness Allowance to the EPF account. Let's say the basic monthly salary is Rs. 15,000, and the employee contribution will be 12% of Rs. 15,000, or Rs. 1800.
Section 80C of the IT Act permits employees to deduct up to Rs 1.5 lakh of their EPF account contributions.
EPF contributions are either 12% of Rs. 15 or 12% of the basic salary plus any applicable Dearness Allowance. The employer's upper limit of EPF contribution every month is 12% of Rs. 15,000. It is always possible for employees to contribute more.
The next fiscal year will implement a new Section 9D of the IT regulations, requiring employees who contribute more than Rs. 2.5 lakh per year to pay taxes
Disclaimer: The calculator available on the 5paisa website is intended for informational purposes only and is designed to assist you in estimating potential investments. However, it is important to understand that this calculator should not be the sole basis for creating or implementing any investment strategy. 5Paisa does not take responsibility or liability for the accuracy of the figures generated by the calculator. It's also important to remember that the examples given here do not make any claims regarding the performance of any particular asset or investment. Before making any financial decisions based on the results of this calculator, we highly advise every investor to consult with a qualified advisor. View More..