EPFO: PF account holders can create a fund of Rs 2 crore with a basic salary of Rs 10,000, understand the calculation..

It is very important to start investment planning now for financial security after retirement. Its goal is to create a strong fund so that you do not have to face any kind of financial trouble in old age. Employees' Provident Fund is an excellent and safe option in this case. It not only keeps your money safe but also gives you good returns.

No matter how low your salary is, you can also create a strong retirement fund through EPF. You can create a big retirement fund for yourself even with a basic salary of Rs 10,000.

Guaranteed return on EPFO ​​investment-

Although there are many investment and retirement schemes available in the market, no scheme can compete with the facilities available in the Provident Fund of EPFO ​​(Employees' Provident Fund Organisation). Because EPFO ​​interest rates are not only better than other savings schemes, but EPFO ​​also gives guaranteed returns year after year, which can help you raise a good fund for retirement.

Although many market-linked schemes can give higher returns than EPF, they also have many uncertainties associated with them and they cannot guarantee a large fund by the time you retire.

How does the EPFO ​​scheme work for employees?

Under this scheme, the company deducts 12 percent every month from the basic salary of the employee and the company also contributes the same amount to it. Out of the company's contribution, 8.33 percent goes to the employees' pension schemes, while 3.67% goes to the employee's Provident Fund.

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Who can avail of the benefits of EPF?

To avail of EPF, you need to fulfill certain eligibility criteria. Formal sector organizations with 20 or more employees are required to register with the EPFO. However, organizations with less than 20 employees can register with the EPFO ​​voluntarily.

All salaried employees are eligible for EPF. Specifically, employees earning less than Rs 15,000 per month are required to register for the EPF scheme, while those earning more than Rs 15,000 can opt for the EPF scheme voluntarily.

When can you claim EPF?

Employees can withdraw their EPF funds on retirement or when they leave the job, provided they fulfill the prescribed conditions. If the employee dies, their dependents get the benefit of EPF.

Let us know how a retirement fund of Rs 2 crore can be created from a basic salary of Rs 10,000-

Suppose an employee is 23 years old and his basic salary is Rs 10,000 out of a total salary of Rs 40,000. The current interest rate of EPF is 8.25%. The employee expects a 10 percent increase in his salary every year till the age of 60, i.e. till retirement. So in this context, how much will the employee contribute to EPFO ​​in the next 37 years?

According to the rules of the Employees' Provident Fund Organization (EPFO latest update), employees contribute 12 percent of their basic salary, i.e. Rs 1,200 every month, to EPF. The company also contributes the same amount. Out of the company's Rs 1,200, Rs 367 is added to the EPF fund, making the total monthly EPF contribution Rs 1,567, which increases by 10 percent annually. The remaining Rs 833 goes to the Employees Pension Scheme from the company's contribution.

Age of the employee: 23 years

Years of service: 37 years (till retirement at the age of 60)

Total monthly contribution: Rs 1,200 (employee) + Rs 367 (from the company) = Rs 1,567

Annual salary increase: 10%

According to this, in 37 years, the total deposit amount is Rs 68,46,018.

The total interest received on this amount is Rs 1,30,08,857.

In this way, the total corpus or maturity amount after 37 years will be Rs 1,98,54,875.

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