EPFO: Govt declares 8.15% interest rate on EPF. Here is how to calculate your retirement corpus

The Union finance ministry has notified the rate of interest for provident fund contributions at 8.15% for 2022-23. If you are planning for a secure retirement, it is crucial to ensure financial stability. The Employees’ Provident Fund (EPF) is a popular retirement savings scheme. You can easily calculate your corpus using an EPF calculator. This article will guide you through the process of calculating your retirement corpus using an EPF calculator.

The Employees' Provident Fund (EPF): The EPF, commonly known as the Provident Fund (PF), is a retirement savings fund. Where both employers and workers contribute to the employees' future, it is governed by The Employees' Provident Funds Act 1952. It is mandatory for employers with a minimum of 20 employees to have EPF accounts for their workers.

An EPF calculator is a valuable online financial tool that can estimate the total amount you will have in your EPF account upon retirement. By feeding in details like your current age, basic monthly salary, dearness allowance, monthly EPF contribution, and desired retirement age, the calculator can determine the accumulated corpus through EPF available to you at retirement.

Amit Gupta, Managing Director at SAG Infotech, says, “Each month, an employee contributes 12% of their basic pay and Dearness Allowance to the EPF account. Simultaneously, the employer also matches this contribution with an equal amount. Of the 12% contributed, 8.33% goes towards the Employee Pension Scheme, while the remaining 3.67% is directed to the EPF.”

Gupta adds, “The EPF offers a guaranteed return and the interest rate for the EPF scheme is set by the EPFO every year that varies annually. The interest is calculated monthly, and the accumulated interest is deposited into the EPF account at the end of the financial year. After the first month's contribution, the EPF account balance will increase, and it will begin earning monthly interest. The monthly interest amount is calculated based on the EPF balance at the beginning of the month and the applicable interest rate. This process continues throughout the financial year, resulting in a cumulative interest deposit at the year-end.”

The EPF calculator empowers individuals to make informed choices about their retirement savings. By accurately calculating the retirement corpus using the EPF calculator, one can take proactive steps towards securing a financially comfortable and worry-free retirement.