EPF Interest Calculation: What will be retirement corpus on Rs 3,000, Rs 6,000, or Rs 9,000 monthly contribution for 25-year-old
EPF Retirement Corpus Calculation: Employees' Provident Fund (EPF) is a retirement scheme for private sector employees to help them build a retirement corpus through monthly contributions to their EPF account. If they start contributing in their mid-20s or early 30s and do it for a long time, they can create a large, tax-free fund.
EPF Retirement Corpus and Interest Calculation: Employees' Provident Fund (EPF) is a retirement scheme for private sector employees where they can contribute monthly and build a corpus that can help them achieve their financial goals post retirement. They can keep EPF as an important part of their retirement planning since the interest earned on their contributios is tax-free. Since it is not a market-linked scheme, the risk is miimum. In this write-up, know more about the EPF scheme and what can be the retirement corpus for a 25-year-old EPF subscriber on monthly contributions of Rs 3,000, Rs 6,000, and Rs 9,000.
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Who contributes to EPF?
In the EPF account of an EPF subscriber, the employee and the employer both contribute on a monthly basis.
Minimum and maximum EPF contribution
An employee becomes eligible for EPF when their basic salary is at least Rs 15,000. The EPF contribution in that condition is Rs 1,800. While the maximum contribution is 12 per cent of the basic pay and dearness allowance (DA) of a person.
What is the EPF interest rate?
The current interest rate is 8.25 per cent. It can change in the future.
What are EPF tax benefits?
Contributions up to Rs 1.50 lakh in a financial year provide tax benefits under Section 80C of the Income Tax Act, 1961. The scheme falls under the exempt-exempt-exempt (EEE) category, where the invested amount, interest earned, and the maturity amount are tax-free.
What happens to the employer's EPF contribution?
The employee's 3.67 per cent contribution goes to the employee's EPF, while the rest 8.33 per cent goes to the Employees' Pension Scheme (EPS).
When can one withdraw EPF corpus?
On completion of 10 years of service; at 58 years of age, on remaining unemployed, or under specific circumstances, the EPF corpus can be withdrawn.
EPF calculation conditions
We will calculate the EPF retirement corpus on investments of Rs 3,000, Rs 6,000, and Rs 9,000 monthly for 35 years (from 25 to 60 years) of age.
EPF corpus on Rs 3,000 monthly contribution for 35 years
At a Rs 3,000 monthly contribution for 35 years, or a total investment of Rs 12,60,000, the estimated EPF corpus will be Rs 71,00,377.88.
EPF corpus on Rs 6,000 monthly contribution for 35 years
At a Rs 6,000 monthly contribution for 35 years, or a total investment of Rs 25,20,000, the estimated EPF corpus will be Rs 1,42,00,755.76.
EPF corpus on Rs 9,000 monthly contribution for 35 years
At a Rs 9,000 monthly contribution for 35 years, or a total investment of Rs 37,80,000, the estimated EPF corpus will be Rs 2,13,01,133.64.