The Employees Provident Fund Scheme is one of the most popular saving schemes in India. It not only helps employees save for their retirement but also provides a sense of financial security in case of unexpected job loss. With the introduction of the UAN, it has become easier for employees to keep track of their EPF accounts and evaluate their savings.
Most employees in the private sector who work for organised industries are entitled to post-retirement benefits. Notably, government staff are also entitled to pensions, unlike those who work in the private sector. After the EPF Act was approved by Parliament, the EPF was established.
One thing to note is that the EPF interest rate is subject to change every year based on the recommendation of the EPFO Central Board of Trustees and the approval of the Ministry of Finance. This means that the amount employees receive at the time of retirement may vary depending on the interest rate in effect at that time.
Overall, the Employees Provident Fund Scheme is an excellent option for employees looking to save for their retirement. With the help of the EPF calculator, they can make informed decisions about their finances and plan for a secure future.
Employees who are enrolled in the EPF system make a set contribution of 12% of their basic wage and dearness allowance. A further equal 12% payment is made by the employer, of which 8.33% goes to EPS and 3.67% goes to the employee's EPF account.
Example to Calculate EPF for an Employee
To better grasp that, here is an illustration: assuming that an employee's compensation, including DA, is Rs 100,000. Employees contribute 12%, or Rs 12,000, to their EPF. Now, the company pays 3.67% of the total, or 3,670, and also pays to the EPS, which is 8.33% of 40,000, or 8,330.
The employee's EPF account will receive a total of Rs 15,670 in contributions from the company and the employee. The monthly interest rate is 8.15 per cent divided by twelve, or 0.67 per cent. The entire payment for the first month would be Rs 15,670.
