EPF means Employees Provident Fund. It is a savings plan for retirement. It is managed by EPFO (Employees Provident Fund Organisation). In this plan, both worker and company put money. The worker gives 12% of basic pay. The company gives 3.67% of worker’s basic pay. This money goes to the worker’s EPF account. It is a must to pay, so savings happen every month.
EPF is not only savings. It also gives a pension and insurance. The government gives fixed interest on the money. From the total money, 8.33% goes to EPS (Employees Pension Scheme) and 3.67% stays in EPF. EPS gives a pension later.
The government is giving 8.25% yearly interest on EPF. With regular savings in EPF, a big fund can be made for retirement. Even if someone puts only Rs 5,000 every month, with salary growth and 8.25% interest, the savings can become around Rs 3.5 crore at retirement.
Example:
If a worker’s monthly salary is Rs 64,000, then the basic salary is Rs 31,900. HRA is Rs 15,950 (50% of basic), and other allowances are Rs 16,150. From this, 12% of basic (Rs 3,828) and 3.67% of basic (Rs 1,172) go into EPF every month. So, total Rs 5,000 is saved in EPF monthly.
Here we think salary grows 10% every year. So, the money going to EPF also grows every year. On this, 8.25% interest is added. If a person starts saving at 25 years and continues till 58 years (33 years), the total retirement fund will be about Rs 3.5 crore.
In this time, the total money put in EPF will be Rs 1.33 crore. EPS also gives pension. Right now, the minimum pension is Rs 1,000 per month. The exact pension depends on salary and years of work.
To check EPF balance:
- Send SMS → EPFOHO UAN ENG
- Send to: 7738299899
(Use ENG for English, HIN for Hindi, TAM for Tamil, BEN for Bangla, etc.)