EPF Calculator: Retirement is an important part of every person’s life. This is the time when you want to get free from the job and fulfill your remaining dreams by relaxing, or you want to travel and spend time with family. But the most important thing for this is money. Most people in India rely on schemes like Employee Provident Fund (EPF) for retirement.

Saving for Retirement

This is a government scheme that helps working people save for retirement. But the question arises that if your age is 25 years and basic salary is Rs 20,000, then how much money can you get on retirement? In India, Employee Provident Fund (EPF) and Employee Pension Scheme (EPS) are two such schemes that make retirement secure. In this story, we will know in simple words and through calculations that if the salary is Rs 20,000 per month, then how much fund and pension can you get from it after 35 years?

What is EPF and EPS?

First of all, let us know about EPF and EPS. EPF is a scheme in which a part of your salary is deducted every month and the same part is deposited by your employer. This money is deposited with the Employees Provident Fund Organization (EPFO) and you get interest on it. Your employer also deposits it. This money is deposited with the Employees Provident Fund Organization (EPFO) and you get interest on it. The interest rate of EPF has been fixed at 8.25% for the financial year 2024-25. The biggest advantage of this scheme is that the money deposited in it, the interest received on it and the amount received on retirement are tax-free.

Your basic salary every month in EPF

Now let’s come to EPS. EPS is a pension scheme and that too runs under the Employees Provident Fund Organization (EPFO). Its purpose is to give you pension every month after retirement. The money in EPS comes from your employer’s contribution. When 12% is deducted from your salary for EPF, the employer also contributes 12%. Out of this 12%, 8.33% goes to EPS.

The remaining 3.67% goes to EPF. But there is a catch in EPS. This contribution is applicable only on up to Rs 15,000 of your basic salary and dearness allowance. This means that even if your basic salary is more than Rs 15,000, only Rs 15,000 will be counted as 8.33% in EPS.

How much money goes out of your salary?

Suppose your basic salary is Rs 20,000. Out of this, your contribution: 20,000 × 12% = Rs 2,400 every month to EPF.

Employer’s contribution: 20,000 × 12% = Rs 2,400, which is divided into two parts

In EPS: 15,000 × 8.33% = Rs 1,250 (as EPS is calculated on maximum salary of Rs 15,000).

In EPF: 2,400 – 1,250 = Rs 1,150.

Total in EPF: 2,400 (yours) + 1,150 (employer’s) = Rs 3,550 per month.

In EPS: Rs 1,250 per month.

How much fund from EPF after 35 years?

You are 25 years old and will retire in 60 years, that is, there is a time of 35 years. Every month Rs 3,550 is deposited in EPF. In a year it becomes: 3,550 × 12 = Rs 42,600.

Now this money will grow for 35 years at 8.25% interest. To make it easier, we assume compounding. Depositing Rs 42,600 every year will give you around Rs 68.9 lakh after 35 years at 8.25% interest. Your money grows every year. In the first year, you will get 8.25% interest (Rs 3,514) on Rs 42,600. Next year, you will get this interest on the previous money and interest as well. If this continues for 35 years, this amount reaches Rs 68.9 lakh.

How much pension from EPS?

Every month Rs 1,250 is deposited in EPS. This gets converted into pension after retirement. The pension is calculated as follows:

Pension=(Years of service×Average salary)÷70 Pension = (Years of service×Average salary)\div 70 Pension = (Years of service×Average salary)\div 70

Years of service: 35 years.

Average salary: Basic salary of last 60 months. This is counted in EPS upto the limit of Rs 15,000.

So pension = (35 × 15,000) ÷ 70

= 5,25,000 ÷ 70

= Rs 7,500 per month.

What is the total profit?

Now let’s add both

From EPF: Rs 68.9 lakh (lump sum)

From EPS: Rs 7,500 per month

It is difficult to convert pension into a lump sum, but suppose you live for 20 years (60 to 80 years) after retirement:

7,500 × 12 × 20 = Rs 18 lakh.

Total benefit: 68.9 lakh + 18 lakh = Rs 86.9 lakh. But this is just an estimate, because the pension lasts for your entire life.