Employee Provident Fund
The Employee Provident Fund (EPF), also known as Provident Fund (PF), is a retirement benefit scheme that private sector companies offer to their employees. This scheme comes under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, to ensure the financial security of private-sector employees. The Employees’ Provident Fund Organisation (EPFO) regulates the scheme.
Under this structure, both employers and employees contribute an equal amount to the fund. Simply put, you invest a portion of your monthly salary in the PF, and your employer adds the same value to the fund. You receive the income generated from the PF after retirement. Thus, EPF assists in providing financial security even after retirement or loss of employment.
Read on to learn how to calculate the proceedings from your PF account using our PF Calculator.
What is a PF calculator?
Our calculator will help you determine the amount of money generated by your EPF and how much you can expect to get at retirement. Our online EPF calculator:
- Eliminates the need for calculating the PF amount manually every month.
- Eliminates the need of tracking changes in the PF interest rate as our calculator uses the current rate automatically.
- Informs you about any recent changes, contributions, or transactions after every use. Our notifications help you stay up-to-date with the PF account and any regulation introduced by the EPFO.
- It comes with the assurance that the information regarding your EPF remains accurate every time.
How to calculate the EPF
Before understanding the formula used for our EPF calculator, you need to have an idea about a few details, such as the basic monthly salary and Dearness Allowance (DA), your EPF contribution percentage, the employer’s contribution, and the interest rate.
To explain the PF calculation formula, let us assume that your basic monthly salary with Dearness Allowance (DA) is ₹15,000, your contribution to EPF is 12% of the amount, and the employer’s contribution towards EPF is 3.67%. The employers invest the remaining 8.33% in the Employee Pension Scheme.
As per the above illustration:
Your contribution to the EPF will be 12% of ₹15,000 = ₹1,800
Your employer’s investment in EPS will be 8.33% of ₹ 15,000 = ₹1,250
Your employer’s contribution towards EPF will be your contribution minus the employer’s contribution towards the EPS = ₹1,800 - ₹1,250 = ₹550
Hence, the total monthly contribution to the PF account will be ₹1,800 + ₹550 = ₹2,350
With the current yearly interest rate of 8.5%, you will get a monthly interest rate of 8.50%/12 = 0.70% (approximately).
The value of the PF fund on your joining month will be ₹2,350, as the employers do not pay any interest for the first month. The following month, the total contribution will become ₹2,350 + ₹2,350 = ₹4,700.
You will also receive an interest of ₹4,700 x 0.7083% = ₹33.29. The PF calculation uses the same formula for the subsequent months.
Benefits of the EPF scheme
Some of the essential features and benefits of EPF include:
- You can avail of its multiple tax exemptions. The interest earned, any withdrawal made after the first five years of employment, and maturity returns from the EPF offer tax benefits. Additionally, Section 80C of the Income Tax Act, 1961 makes your contribution to the PF tax-deductible.
However, the interest earned from the EPF is tax-free only if your yearly contribution is under ₹2.5 lakh. If it is over this amount, you will have to pay a tax on the interest income.
- You can make withdrawals from the PF in case of any financial or medical emergency before the scheme’s maturity.
- You can add a family member as your nominee to the PF. If an unfortunate event leads to your absence, the nominees will receive the accumulated PF amount.
- You also get a life insurance cover under the EPF, ensuring the financial security of your nominees. Employees Deposit Linked Insurance Scheme (EDLI)1976 rules offer this benefit.
- You can withdraw the money from your PF after two months from the date of resignation if you decide to leave the job.
- You also have the option to use the Volunteer Provident Fund feature of PF, which allows you to contribute more than 12% if you so wish.
Changes in PF interest rates over the years
EPFO’s Central Board of Trustees consults with the Ministry of Finance to determine the EPF interest rate every year. Here is a list of the interest rate over the last six financial years.
How to check your EPF account balance online
Understanding how PF is calculated is necessary to determine your profits from the scheme. You can also find the balance online through multiple options, such as:
1. Umang App by the Government of India
Follow the below steps to check the EPF balance with the Umang App.
- Download the app on your smartphone
- Register on the app with your mobile number
- Check the EPF balance along with raising and tracking claims
If your Universal Account Number (UAN) is registered with the EPFO, you can find the PF balance and your latest contribution by sending an SMS from your registered phone number. Type ‘EPFOHO’ followed by the UAN and the first three letters of your chosen language, for example, ENG for English. Send it to 7738299899.
3. Missed call
Give a missed call to 011-22901406 from your registered mobile number to know the PF balance. This option only works if the UAN is linked with your PAN, Aadhar Number, and bank account. If the accounts are not already linked, you can request your employer to do it.
4. E-Sewa Portal
The EPFO E-Sewa Portal lets you check your EPF passbook online. Register your account with the portal and link your UAN first. Then, to see or download the passbook online:
- Visit www.epfindia.gov.in and log in using your registered account.
- Find the ‘Our Services’ section and click the ‘For Employees’ option under it.
- Select the ‘Member Passbook’ alternative under the ‘Services’ section.
- Log in to the ‘Passbook’ section using your ID and password to check your EPF balance.
How to transfer money from an existing EPF account
Even if you change your job, your UAN will remain the same. You can use it to transfer the money to your new employer’s EPF account. Here are the steps to complete the process successfully:
- Log in to the EPF members’ portal.
- Enter the ‘Online Transfer Claim Portal section’ and log in using the same ID and password that you used for the EPF portal.
- Click the ‘Request for Transfer of Funds’ option and provide the required details about your previous employer.
- Get the information authenticated by either your new or previous employer.
- Save the PIN that you will get via SMS on your registered mobile number.
- Save the tracking ID that you will receive to use for checking the transfer application’s status.
Can I use the same calculator after changing my employer?
Yes. Input the relevant information required and use our calculator seamlessly, even after you switch jobs.
How many times can I use the calculator?
You can use our calculator as many times as you want. It’s totally free!
In this article