If you contribute to EPF, then an EPF pension calculator will help you figure out how much you will have by the time you retire. All you need is your monthly salary and the duration for which you will contribute. Then the EPF pension calculator will give you the estimated amount. You can find many EPF pension calculator online where you can get this calculation.
Here, we discuss everything about EPF, how it is calculated and the benefits of a EPF pension calculator.
What is an EPF Calculator?
The EPF pension calculator is a simple tool showing how much your retirement funds would be worth in different scenarios. You can use an EPF retirement calculator by setting up the annual contributions with interest rates. This can be done easily from your mobile.
The EPF calculator helps you see the various ways to grow your retirement corpus and reach your goal. The EPF calculator India allows you to specify the option that best matches your current income and investment profile and estimates how much you must save every month to meet a specific financial goal.
How Does an EPF Calculator Work?
To get a better understanding of how the EPF pension calculator works, it is better to consider an example.
Let’s assume that your basic salary and all allowances total up to Rs 14,000. Then you will be paying 12% towards your EPF, or Rs 16,80. Your employer will contribute 3.67% towards your EPF account. That means Rs 514, in this case. Your employer will also contribute 8.33% (Rs 1,166) towards the EPS of the employee.
Now, the interest rate for the ongoing fiscal year is 8.1%. That means the interest rate that would be applicable every month would be 0.675%.
These are the basic facts. Now let’s assume you have been working at your company since April 2019. Then the total EPF contribution for the month of April is Rs. 2,194.
Now, the EPF contribution for May will be Rs 4,388 (Rs 2194 + Rs 2194). You will be receiving an interest of Rs 4,388 * 0.70833% = Rs 31.08.
For the following months, you can calculate the EPF contribution in a similar fashion.
Formula of EPF Calculator Online
The employee contributes 12% of their basic salary along with the Dearness Allowance every month to the EPF account. For example: If the basic salary is Rs. 15,000 per month, the employee contribution shall be 12 % of 15000, which comes to Rs 1800/-. This amount is the employee contribution
How to Use the EPF Calculator?
- For PF pension calculation, you need to provide your current age.
- Fill in the required details like the basic monthly salary and the dearness allowance.
- Know that you need to provide at least 12% to your EF account. This percentage might increase if you are contributing to the Voluntary Provident Fund.
- Provide the retirement age. This can be up to a maximum of 58 years.
- Provide the current EPF balance if you are aware of the amount.
- The EPF pension calculator will calculate the EPF funds that will be available when you retire.
Benefits of Using the EPF Pension Calculator
- Easy to use: There are several benefits of using an EPF calculator online as it is user-friendly and straightforward. You can also avoid mistakes and never get incorrect calculations on your investment returns while using an online EPF calculator.
- Helps in achieving financial goals: You earn more than you spend, and investing in an EPF helps you achieve your financial goals. The online EPF interest rate calculators will show you the rate of return on your investment while at the same time they also calculate the total accumulation of your savings, providing you with a payment schedule and an estimated maturity value.
- Reduce the burden of manual calculation: You can reduce the burden of trying to calculate your EPF interest manually. You do not need to bring out your calculator, worry about forgetting essential calculations, or try to find a long-forgotten mobile calculator that is locked out somewhere.
Did You Know?
EPFO’s total workforce, encompassing all levels, is currently around 20,000.
What You Must Know About EPF Contributions
- The employee contributes 12% of their basic salary towards their EPF account. In addition to this, the employer also contributes their own 12% share to the account. As a result, a total of 24 % of an employee’s basic pay is invested in the EPF scheme.
- The EPF interest rate is decided and set on a yearly basis. As of now, for the financial year 2022-23, this interest stands at 8.10%.
- As per the law, any organisation that has 20 or more people working under them has to register with EPFO. Employees can get their EPF benefits from their employers. In addition to this, the laws also claim that any working employee with a salary of Rs 15,000 or above has to be a part of the EPF program.
- You can withdraw your EPF funds in three different possibilities.
- If you turn 58 years old.
- If you have been out of work and haven’t had any steady source of income for two months or more.
- If your EPF account has been inactive for more than 3 years, you will still be awarded interest on your deposit amount in the same manner as you did before. This will continue until you reach the age of 58 years. This is what makes EPF the perfect tool to prepare for retirement.
- If you are investing in an EPF scheme, you can be exempt from taxes. That’s because it falls under the EEE (exempt-exempt-exempt) category.
Key Takeaways:
- If you want to save money for your retirement, make monthly payments to your pension throughout your earning years.
- The key components determining the requirement to pay to EPF are the employer, the employee, and the salary.
- The government manages a provident fund, which has established base contribution amounts.
- EPF calculators are available online free of charge. You can use them for pf pension calculation and get the exact amount you need to contribute every month to get the desired lump sum amount on maturity or your retirement.
Word to Remember
UAN
Each user, who participates in the EPF system, is granted a 12-digit number called a Universal Account Number (UAN). This unique number is issued to every employee to prove their participation in the EPF system. Applying for the UAN will help you keep track of your EPF funds and enable you to withdraw the PF.
Conclusion
Your EPF prepares you for your post-retirement life. As part of this scheme, you as well as your employer both contribute 12% of your basic salary towards your EPF. Over time, with interest acting on it, this fund becomes big enough to provide for your post-retirement life. Now, if you want to know how much you will have when you retire and do PF pension calculation, then you should use an EPF pension calculator
Frequently Asked Questions
An employee contributes 12% of their salary towards their pension scheme.
If your basic salary increases, so does your EPF contribution.
You can withdraw your Employee Share in the following cases:
If you retire at or after the age of 58 years.
If you have been unemployed for the past two months.
Your nominee can withdraw the amount in the case of your untimely death.
You need to be aware of the following things:
– Basic salary (basic pay + allowances)
– Your percentage of contribution to the EPF as well as the contribution of your employer
Current interest rates on EPF.
The Employees’ Pension Fund contribution is 12 percent of the employee’s salary or 3.67 percent of the employer’s contribution. If you need to decide whether to include the EPF into your paycheck or withhold it separately, use an EPF Return Calculator that can help you out.
If you are a working professional with a salary less than Rs 15,0000, then your EPF account will be opened by your employer. However, if your salary is more than Rs 15,000, it is no longer compulsory for you to become an EPF member. It is upto you to register with the organization.
You need to be aware of the following things:
– Basic salary (basic pay + allowances)
– Your percentage of contribution to the EPF as well as the contribution of your employer
Current interest rates on EPF.
Employees cannot withdraw the complete amount from a company if they have not been out of the job for at least two months.
In order to get full pension, one is required to complete 10 years of service and active contribution towards the EPF pension scheme.
EPFO is considering a new pension product for organised sector employees receiving basic salaries of more than Rs 15,000 per month who are not covered under Employees’ Pension Scheme of 1995.
