If you are employed, money is deducted from your salary every month in EPF i.e. Employees Provident Fund. This small contribution creates a huge fund in the long run.
If you deposit just Rs 5000 every month in EPF and your salary increases by 10% every year, then this amount can reach up to Rs 3.5 crore by the time of retirement
Do you know, by investing just Rs 5000 per month in EPF, you can create a retirement fund of Rs 3.5 crore?
EPF i.e. Employees Provident Fund is a government retirement scheme, which is managed by EPFO. In this, the employee deposits 12% of his basic salary and the employer contributes 3.67%. 8.33% goes directly to the pension (EPS).
The government pays a fixed interest on this every year. The current interest rate is 8.25%. That means the money keeps growing on its own.
Example:
- If your salary is Rs 64,000, the basic will be Rs 31,900.
- Employee contribution: Rs 3,828
- Employer contribution: Rs 1,172
- Total EPF = approx Rs 5,000 per month
If the salary increases by 10% every year, the amount going into EPF will also increase.
Also, 8.25% interest will keep getting added continuously.
- If a person starts working at the age of 25 and pays EPF continuously for 58 years…
- total time = 33 years
- Total investment in EPF during this period = Rs 1.33 crore
- but with interest and growth, the fund till retirement will be = around Rs 3.5 crore
EPF not only provides savings but also the benefits of pension (EPS) and insurance. That is why it is considered the safest and most reliable retirement plan.
