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EPFO: Know how to receive Rs 15,670 PF as monthly pension after retirement
Every employee must pay 12% of their basic monthly pay and deferred compensation (DA) into the EPF. Then, the employer is also required to make a similar contribution.
Updated : May 06, 2023, 07:05 AM IST | Edited by : Maitry Kothari
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If you work for an organised sector, the majority of private sector employees are eligible for post-retirement benefits. Notably, in contrast to their counterparts in the commercial sector, government personnel are also eligible for pensions. Employee Provident Fund was set up after the EPF Act was passed in Parliament.
According to the law, the Employees Provident Fund Organisation of India (also known as EFPO) is in charge of the money that both the employee and the employer put in a permanent account that is identified by a UAN, or Unique Account Number. You can evaluate your savings effectively with the aid of an EPF calculator.
The provident fund is very helpful for making future financial decisions since it serves as a guarantee for future prosperity or job loss.
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Employees who are covered by the EPF system contribute a fixed amount of 12% of their base pay and dearness allowance to the programme. Then, the employer also makes an equal 12% contribution, of which 8.33% goes to EPS and 3.67% goes to the employee’s EPF account. Equal contributions should be made to the EPF plan by the employer as well. After consulting with the Ministry of Finance, the EPFO Central Board of Trustees determines the EPF interest rates. For FY 2022–2023, the EPF Interest Rate is set at 8.15%.
How does the EPF calculator work?
Let’s understand that with an example: Assuming the salary of an employee is 1,00,000 including DA. Employee contribution towards their EPF is 12% i.e.12,000. Now, the employer contributes 3.67% i.e., 3,670 and the employer contributes towards EPS which is 8.33% of 40,000, which is 8,330.
The total contribution by the employer and employee towards the EPF account of the employee will be 15,670. The interest rate applicable for each month is 8.15%/12 = 0.679%. The total contribution for the month of joining will be Rs 15,670.
