Kolkata: 

The EPF scheme draws on a 12% contribution from the basic + DA of the employee’s salary. It is taken from the employee. A contribution is also taken from the employer. The entire amount taken from the employee’s salary is deposited in the EPF account. But only 3.67% of the portion deducted from employer is put in the EPF account. The rest (12-3.67 = 8.33%) is put into a pension account.

Legislated in 1952 a few years after Independence, the Employees Provident Fund (EPF) is not only the earliest social security scheme for employees in the country but also one of the most impactful. It provides assured and tax-free returns for all employees working in any organisation that employ 20 or more persons. The most important feature of the EPF is that it uses the force of compounding and regular contribution to build a sizeable corpus. EPF calculator: Basic salary less than Rs 5,000

Let’s assume a person starts earning at the age of 23 and retires at the age of 58. Let’s assume that he/she gets a basic salary of Rs 4,500. Let’s also assume that this individual gets an average salary increment of 5% — a rate that can barely keep pace with retail inflation. The EPF calculator will tell you that the EPF kitty will stand at Rs 28,95,567 (Rs 28.95 lakh) when this person retires. By the way, this calculation assumes that the rate of interest paid by EPFO stands at 8.25% as paid in FY24.

Now if we assume that this person is able to earn a salary increment of 7.5%, the kitty will swell to Rs 45,00,093 (Rs 45 lakh) in the same period of time. If the rate of increment jumps to 10%, the money in EPF will rise to Rs 73,95,334, or Rs 73.95 lakh.

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