EPF Calculator Method II: The Employee Provident Fund is a Social service scheme initiated by the Government of India to support individuals by generating future savings while they are earning. Employees make monthly contributions towards their PF account that accumulate into tax-free savings at the time of their retirement. EPFO is the world’s largest Social Security organisation in terms of the volume of transactions and number of clients. It is constituted by the Government of India under the Employee’s Provident Fund and Miscellaneous Act, 1952.
The EPFO operates the following schemes:
- The Employee’s Provident Funds Scheme 1952 (EPF)
- The Employee’s Pension Scheme (EPS)
- The Employee’s Deposit Linked Insurance Scheme 1976 (EDLI)
The employees who fall under the scheme have to make a contribution of 12% of their total salary( basic pay+dearness allowance) and receive a fixed rate of interest as set by the EPFO Central Board of Trustees. For the year 2020-21, the rate of interest is fixed at 8.5%. The amount of interest received and the total accumulated amount is tax-free. The EPF is a mandatory saving scheme for almost all individuals working in the Government, public or Private sectors.
An employee with Basic pay and dearness allowance of 7500 has a salary of 20,000 works in an organization for 35 years. Every year he receives an increment of 5%. He makes a 12% contribution of his salary towards the PF account and this amount is matched by his organisation. Over the course of his service, he contributes a total of Rs. 9,75,459.32 and his company makes a contribution of Rs. 7,48,239.32. His total contribution towards his PF account comes out at 17,23, 698.64 which grows into 65,86,528.751. The process of calculation of the EPF amount is discussed below.
What is an EPF Calculator?
An EPF calculator is a simulation, which shows you the total amount of money that will accumulate in your EPF account at the time of your retirement. It allows you to calculate the lump-sum amount including your contribution and the contribution made by your employer along with the accrued interest amount.
The EPF calculator is an effective method of calculating the EPF amount that will help you in planning your financial position. There are various calculators available online that require you to fill in the necessary details such as your current age, basic pay, dearness allowance, your contribution to the EPF and your retirement age. Upon entering the requisite details, the EPF calculator will show you the EPF funds available at the time of your retirement. The rates of the contribution of the various EPFO schemes are as follows:
|EPFO scheme||Employee Contribution||Employer Contribution|
|Employee Provident Fund||12%||3.67%|
|Employee’s Pension Scheme||0||8.33%|
|Employee’s Deposit Linked Insurance Scheme||0||0.5%( capped at a maximum of Rs.15,000)|
|EPF Administrative Charges||0||0.85%|
|PF Admin Account||0||1.1%|
|EDLIS Administrative Charges||0||0.1%|
How does it Work?
Let’s look at the working of the EPF calculator using an example:
An employee with a salary(basic pay+dearness allowance) of 14,000.
Employee’ salary= Rs 14,000
Employees contribution=12%*14,000= Rs 1,680
Employers contribution=3.67%*14,000= Rs 514
Total Contribution= 1680+514=Rs 2,194
Let the interest rate be at 8.5%.
Monthly interest rate=8.5%/12=0.70833%
The interest received on the monthly EPF contribution of the employee= 2,194 * 0.70833%=15.04
Similarly, the EPF contribution and interest is calculated for the subsequent months.
How to Check your EPF Balance?
To check your EPF balance you need to visit the government EPF portal online.
- Select the location of your EPF office.
- Fill in your details and the EPFO account number.
- Submit the form after verifying your details
- Your EPF balance will be sent to your mobile number if all your records are in place.
In the event of a job change, your EPF amount will be transferred with the help of your UAN which remains the same. You can transfer your EPF money by following these simple steps:
- Visit the EPF member portal and complete your registration.
- Login using the Login Credentials.
- Visit the Online transfer claim and request for the EPF transfer using the same login credentials.
- Click on “Request for transfer of funds” and enter your employment details.
- After getting it authenticated by your employer you will receive a PIN on your registered mobile number.
- Use the tracking ID generated to track your application.
Benefits of Using EPF
EPF is a mandatory social service scheme for individuals who are not excluded, members. The benefits of EPF are as follows:
- EPF acts as a financial support system after your retirement by supporting you with a fixed income.
- You receive a fixed interest on your contribution and the total amount calculated can be withdrawn any time by the employee without worrying about the tax deductions as it is tax-free.
- You can nominate a family member to avail your pension in the event of your demise.
The EPF scheme also covers international workers.
International workers are:
- An Indian employee currently working or having worked in another country with whom India has signed a Social security Agreement concerning the social security benefits.
- Any foreign employee working in India with an establishment that is under the scope of the Employee’s Provident Funds & Miscellaneous Provisions Act, 1952.
Currently, India has signed a social security agreement with Belgium, Germany, Finland, Sweden, Czech Republic, Switzerland, Grand Duchy of Luxembourg, France, Denmark, Republic of Korea, Norway, Austria, Netherlands, Hungary, Canada, Australia, Portugal, Quebec and Japan to avoid double coverage and provide equality of treatment.
Conclusion on EPF Calculator Method II
Employees making a contribution under the EPF scheme enjoy a variety of benefits such as fixed income upon retirement. They can also withdraw the amount in case of emergency. EPF is a social service scheme implemented by the Government of India and the statuary body for the various EPF schemes is Employees Provident Fund Organisation or the EPFO. Visit the website for EPFO to get more details about the various EPF schemes.