The Employees’ Provident Fund Organisation (EPFO) has undergone multiple upgrades over the years. Once considered a traditional system, it has evolved significantly, transitioning from ATM-based access to a seamless, one-click experience on mobile devices. In EPFO, the employer contribute 12 percent of the employee’s basic salary and DA. The body used to declare interest rates for every EPF year. Currently it stays at 8.25 percent.
EPF interest is completely tax-free, making it a great tool for long-term savings. Upon retirement, employees receive a lump sum that includes their contributions along with the accumulated interest. However, they don’t have to wait until retirement to access their funds—partial withdrawals are allowed for essential expenses like education, marriage, or building a home. Each EPF member is assigned a unique 12-digit Universal Account Number (UAN), which stays the same even if they switch jobs, ensuring seamless fund management throughout their career.
With the current interest rates, an intriguing calculation has caught the attention of young professionals, allowing them to plan strategically for a substantial retirement fund.
Access EPF Account
Compared to earlier times, EPFO members now have greater accessibility to their accounts. They can conveniently access their PF accounts online, check their balance, and even withdraw funds through the EPFO portal, making the process smoother and more user-friendly than ever before.
EPF Withdrawal Rules: Retirement, Resignation
You can withdraw your entire PF amount once you retire at the age of 58. However, if you leave your job, you also have the option to withdraw your provident fund after a waiting period of two months.
Calculations To Accumulate 2 Crore Fund
If you start investing in your Employee Provident Fund (EPF) at the age of 21 with a salary of ₹20,000 per month and receive an annual salary hike of 5%, you will contribute a total of approx. ₹45 Lakhs by the time you retire. With an 8.25% annual interest rate, your investment will earn around ₹1.65 Crores in interest over the years. This will result in a total maturity amount of around ₹ 2 crores at retirement.
- Employee + Employer Contribution: 24% of basic salary (assuming full 12% employer contribution to EPF)
Annual Salary Increment: 5%
EPF Interest Rate: 8.25% per annum
Investment Period: Till retirement at 58 years (37 years of contribution)
Projected Retirement Fund
- Total Contribution Over 37 Years: ~₹45.43 Lakhs
Total Interest Earned (at 8.25% annual interest): ~₹1.65 Crores
Final Maturity Amount at Retirement: ~₹2.1 Crores
Total Years Of Investment
As per the above calculation, you will have to invest for around 39 years to make a corpus of ₹2,00,00,000.
