EPF Retirement Corpus Calculator: How much fund can you generate with starting basic salary of Rs 15,000, Rs 20,000, or Rs 25,000? Know here
EPF Retirement Corpus: Employees' Provident Fund (EPF) is a popular scheme to create a retirement corpus. Private sector employees can invest monthly to generate a tax-free corpus that can help them achieve retirement financial goals.
EPF Retirement Calculator: It's the dream of many to live a comfortable post retirement life. But the preparation for such a life should be started early. Therefore, the selection of the retirement investment scheme is important. In India, there are many schemes such as Employees' Provident Fund (EPF), National Pension System (NPS), Old Pension Scheme (OPS), and Unified Pension Scheme (UPS). The purpose of all of them is to help their subscribers generate a retirement corpus that can fulfil their needs of retirement. Some of these schemes are market-linked; others are non-market-linked. Some allow monthly investment, others allow monthly as well as lump investments. EPF is a popular retirement scheme for private sector employees, where their maximum monthly contribution is based on their basic salary and dearness allowance (DA). In this write-up, know how much EPF retirement corpus one can generate if their basic salary is Rs 15,000, Rs 20,000, or Rs 25,000.
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How EPF works
The employee with the basic pay and dearness allowance (DA) of at least Rs 15,000 can have an EPF account, where they can contribute monthly. The employer also matches the equal amount to contribute to the employee's account.
Minimum and maximum monthly EPF contribution
The minimum monthly contribution that an employee can make to their EPF account is Rs 1,800, while the maximum is the 12 per cent of their basic pay and DA.
How much employer contributes to EPF
Not all money from the employer goes to the employee's EPF account. Just 3.67 per cent of the total 12 per cent contribution from the employer goes to the employee's PF account.
How much employer contributes to EPF
The rest, 8.33 per cent, goes to the Employees' Pension Scheme (EPS) account. The employee gets the EPS contribution in the form of a monthly pension post retirement.
EPF interest rate
The current EPF interest rate is 8.25 per cent. The labour ministry reviews it every three months, and the finance ministry approves it.
EPF tax benefits
EPF is one of a handful of schemes that have the exempt-exempt-exempt status. It means contributions up to Rs 1.50 lakh in a financial year, interest earned, and the retirement corpus are tax-free.
EPF retirement calculation
For our calculation, we will take the example of retirement corpuses generated from starting basic salaries of Rs 15,000, Rs 20,000, and Rs 25,000. The monthly contribution will be 12 per cent of the basic pay and DA.
EPF retirement calculation
We will assume the salary to increase by 5 per cent every year. The age when the contribution will be started is 25 years, and the investment duration is 35 years.
EPF retirement corpus with Rs 15,000 monthly basic salary
The total investment in 35 years will be Rs 27,03,243, the estimated interest will be Rs 81,59,652, and the estimated retirement corpus will be Rs 1,08,62,895.
EPF retirement corpus with Rs 20,000 monthly basic salary
The total investment will be Rs 36,04,312, the estimated interest will be Rs 1,08,79,849, and the estimated retirement corpus will be Rs 1,44,83,861.
EPF retirement corpus with Rs 25,000 monthly basic salary
The total investment will be Rs 45,05,360, the estimated interest will be Rs 1,35,99,128, and the estimated retirement corpus will be Rs 1,81,04,488.