EPF Calculator

What is EPF (Employee Provident Fund)?

EPF, or Employee Provident Fund, is a retirement-based saving and investment option offered by the EPFO (Employee Provident Fund organisation). Epf scheme was introduced in 1951 by the government of India by passing a bill in the parliament on 15th November 1951.

Later, in 1952, some amendments were made, the Act is now referred to as the Employees’ Provident Funds & Miscellaneous Provision Act 1952. The Act is valid for the whole of India except Jammu & Kashmir.

The employee contributes around 12% of their monthly basic Pay towards the EPF account & the employer also contributes in the same proportion. EPF is available for employees working in the organised sector of the economy. EPF is open to all employees, be they private or government employees.

Contrary to this, a similar scheme, GPF, is available for only government salaried employees.

Interest on the EPF account on a compounding basis. The employees can claim their EPF at the time of their retirement. The interest on EPF accounts is revised annually by the government of India. Currently, the interest rate offered on the EPF accounts IS 8.15%.

A few important points about the EPF interest rate, are mentioned below:

• The interest rates are revised every year. The current interest rate of 8.15% applies on deposits between 1st April 2023-31 March 2024.
• The interest rate on the EPF account is computed monthly but is transferred to the account every year.
• If the accounts remain dormant for more than thirty-six months, then the account is declared inoperative.
• If the account hasn’t attained retirement age, then the interest is offered on such funds.
• If the account has attained retirement age, then the interest is not offered on such funds.
• For contributions made towards the Employees’ Pension Scheme by the employer, the employee shall not receive any interest. However, a pension is paid out of this amount after the age of 58.

What is the EPF Calculator?

EPF calculator is a mathematical utility device to calculate the maturity amount of your EPF account. It helps you to compute the amount that you could expect at the time of your retirement.

Using a mathematical calculator for such calculations helps you in doing financial planning. The estimates behind the computation of the interest rate are complex. Especially considering all the technical equations and terms, it is complicated to know using a traditional manual calculator. In that case, tools like these come in very handy. You just have to put a few details & the amount is calculated automatically within a few seconds.

How does an EPF calculator work?

Let’s understand it with an example:

Suppose Mr Sam has a basic monthly salary of 20,000.

He contributes 12% for EPF = 12%20,000 = 2400.

Employer contributes 12% for EPF = 12%20,000 = 2400 .

Total contribution towards EPF = 2400+2400 = 4,800.

According to a current interest rate of 8.15%.

Monthly interest rate will be 8.15%/12 = 0.67%.

So, the interest credited to his account will be 32.16.

For the next month’s calculation, the interest will be calculated on 4,800+32.16.

Similarly, the calculation for the subsequent months will be done.

How to use Pocketful’s EPF calculator?

Pocketful’s EPF calculator offers a very user-friendly interface to the users. Given below are the steps to use the EPS calculator in India.

• Step 1: First, enter your current age in the box shown on the screen.
• Step 2: Now, input your basic monthly pay and dearness allowance.
• Step 3: Use the slider or simply enter your percentage contribution.
• Step 4: Press enter & the amount of your EPF account will be shown on the screen.

Benefits of EPF

• Develops saving habits- for any salaried employee, EPF helps in regular saving habits without putting much financial burden. It is essential to save your money at the right time because your funds can save you at an upsetting time.
• Regularly contributing towards your EPF account helps to do retirement planning. The money could help you to maintain your post-retirement lifestyle. A person works most of his life and saves so that they can enjoy the golden years of their life with peace & EPF is a great saving and investment option for the same.
• It does not require a large lumpsum amount at once to start an EPF account. Instead, a small percentage of your basic salary gets transferred to your EPF account monthly. EPF is a no-risk investment instrument. It is, organised, structured and operated under the sight of the Government of India.
• It also acts as a cushion in unforeseen circumstances of financial emergency. EPF allows you to withdraw some portion of the money in your account based on the number of years of your service.

EPF Eligibility

To be eligible for EPF (Employee Provident Fund), the person has to fulfil a few requirements, which are mentioned below:

• The person must be working in an institution where the number of total employees is 20 or more.
• The person is in the age bracket of 18-54.
• The basic monthly salary of the person should be 15,000 or more.