Retirement Planning: If you keep contributing to EPF from the beginning, you can create a strong fund for a comfortable life at the time of retirement. If an employee starts a job at the age of 25 and contributes to EPF continuously for 58 years, his account can become a gold mine on retirement.
For those planning for retirement, EPF or Employer Provident Fund is considered to be the most reliable and safe option. If an employee puts just Rs 5,000 per month in EPF, it can gradually grow to a fund of about Rs 3.5 crore by the time of retirement. It not only provides government guarantee, but also the benefit of pension.
If you are also planning for retirement, then know here how you can create a fund of about Rs 3.5 crore with just Rs 5,000…
What is EPF?
EPF (Employees Provident Fund) is a retirement saving scheme which is managed by EPFO. In this, the employee deposits 12% of his basic salary. The employer also contributes the same amount, but 8.33% of it goes to EPS (Employees’ Pension Scheme) and 3.67% comes into the EPF account. EPS provides the benefit of pension in the future.
How much is the contribution?
Suppose someone’s salary is Rs 64,000 per month. In this, the basic salary is Rs 31,900, HRA is Rs 15,950 and the remaining allowances are Rs 16,150. Now 12% of the basic salary, i.e. Rs 3,828 goes to the employee’s EPF. The employer’s 3.67%, i.e. Rs 1,172 also gets added to the EPF. That means a total of Rs 5,000 is being deposited in the EPF account every month.
Long term benefit
If an employee starts working at the age of 25 and continuously contributes to EPF for 58 years, then his account can become a gold mine on retirement. Assuming a salary growth of at least 10% every year, the amount deposited in EPF also increases every year. The government currently gives 8.25% annual interest on this.
