EPF Calculator: Know how on Rs 16,000 basic salary you can accumulate over Rs 1.5 crore corpus at retirement
Employees' Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India manages the EPF scheme. Employees are insured under this scheme, meaning if an employee dies while employed, their families receive a lump sum amount.
Everyone should start doing financial planning for retirement as early as possible. There are many ways to accumulate funds at retirement. One such option is through an employee provident fund (EPFO). In an EPF account, an employee can invest up to 12 per cent of his basic salary into an EPF account and if they continue investing, they can accumulate a good amount and can re-invest that money to get a regular pension.
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EPF and its benefits
In this article, we will talk about how a Rs 16,000 basic salary can get you more than Rs 1.5 crore corpus at retirement. But before that, let's understand what is EPF, how to invest in this, EPF benefits, and other relevant details.
What is an EPF?
It is a retirement savings scheme in India. It provides retirement benefits to employees after they leave their jobs.
How much does an employee contribute to EPF?
Both employee and employer contribute 12 per cent of the employees' basic salary.
Who manages EPF?
Employees' Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India manages the EPF scheme.
When was the EPF scheme launched?
It was started in 1952 by the Employees' Provident Funds and Miscellaneous Provisions Act (EPF & MP Act).
Benefits of EPF
Employees can use the contribution during their retirement period when there is no source of other income.
Insurance
Employees are insured, meaning if an employee dies while employed, their families receive a lump sum amount.
Withdrawals
Employees can also withdraw money partially if they need it for the purposes like education, marriage, house construction etc.
How to accumulate over Rs 1.5 crore fund with Rs 16K basic salary?
Suppose, someone's basic salary is Rs 16,000 and he/she is contributing 12 per cent starting at age 22. If he continues to invest till age 60, he/she can easily accumulate more than Rs 1.50 crore fund at retirement.
Understand with calculations
Basic salary: Rs 16,000
Expected annual increase in salary: 5%
Current age: 22 years
Investment period: 38 years
Total investment in 38 years: Rs 34,32,754
Total interest: Rs 1,19,08242
Maturity amount: Rs 1,53,40,996