The Provident Fund is a significant benefit organised sector employees receive upon retirement in India. The Provident Fund (PF) scheme is managed by the Employees Provident Fund Organisation (EPFO); both employer and employee contribute to this retirement savings fund.   

To calculate how much money you will have in your EPF account at retirement, you can use an online tool called the EPF or PF calculator. The PF calculator will show your final PF amount after you provide these details: monthly PF contribution, Frequency of contribution, PF interest rate, and Duration. 

What is EPF?

The Employee Provident Fund or the EPF is a retirement benefits scheme for salaried employees in the private sector. The Employees Provident Fund Organisation (EPFO) manages the EPF. Any organisation or firm with 20 or more employees gets covered under the EPFO. The Employees Provident Fund Organisation operates three schemes.

• The EPF Scheme 1952
• The Pension Scheme 1995
• The Insurance Scheme 1976.

The employees who fall under the EPF scheme make a fixed contribution of 12% of the basic salary and the dearness allowance towards the scheme. The employer should also make an equal contribution to the EPF scheme. The EPFO Central Board of Trustees fixes the EPF interest rates every financial year after consulting the Ministry of Finance. The EPF Interest Rate for Financial Year 2023-24 is 8.25%.

The employee would get a lump-sum amount at retirement, which includes the contributions of both the employee and the employer with the interest payments. However, 12% of the employer contribution does not go to the EPF account. Out of the 12% contribution, 8.33% goes towards the Employee Pension Scheme Account, and the remaining 3.67% goes to the employee EPF account.

It is compulsory for all employees who draw a basic salary of less than Rs 15,000 per month to become members of the EPF. You cannot opt-out of the EPF scheme once you become a scheme member. An employee can make an enhanced contribution up to a maximum of 100% of the basic salary to the voluntary provident fund. The employer will not match the contribution.

What is EPF Calculator?

The EPF calculator is an online financial tool that calculates the total PF amount or maturity amount you will receive after retirement from your employment. This maturity amount will include both your and your employer's contributions and the interest credited to your account. The data required to calculate your PF amount is as follows:

• PF contribution/ investment month every month, quarter, half-year or yearly
• PF interest rate
• Duration of contribution
• Frequency of EPF contribution

Formula to Calculate EPF Amount

To understand how to calculate EPF, let us have an example.

• Employee basic salary + dearness allowance = Rs 14,000
• Employee contribution towards the EPF = 12% * 14,000 = Rs 1,680
• Employer contribution towards the EPF = 3.67% * 14,000 = Rs 514
• Employer contribution towards EPS = 8.33% * 14,000 = Rs 1,166.
• The total contribution by the employer and employee towards the EPF account of the employee = Rs 1,680 + Rs 514 = Rs 2,194.
• Now with the Applicable interest rate 8.25% p.a, the monthly earned interest will be; 8.25%/12 = 0.679%

Assuming the employee joined the Firm XYZ in April 2019. The total EPF contribution for April will be Rs 2,194. The EPF scheme will not pay any interest for April. The total amount in EPF account May 2019 = Rs 4,388 (Rs 2,194+ Rs 2,194). He receives an interest of Rs 4,388 * 0.679% = Rs 29.79.

The calculation will be continued until the retirement age (60) of the employee. The calculator will show the PF final amount. 

How can PF Calculator help you?

• Financial Planning Support: A PF calculator aids salaried individuals in planning their retirement by providing a clear view of their projected Provident Fund (PF) balance at retirement, helping them understand how much they need to save monthly to meet their financial goals.
• Effortless Tracking: It automates the calculation of total contributions and interest accrued over time, eliminating the hassle of manual calculations and ensuring accuracy in the tracking of their retirement savings.
• Immediate Updates: Salaried users receive immediate updates on any changes in PF policies, such as adjustments in interest rates or contribution ratios, enabling them to make informed decisions about their investments and savings strategy.

How to use the ClearTax PF Calculator?

• Enter contribution amount for Provident Fund.
• Current EPF Interest Rate is automatically entered.
• Now, fill the duration column by using slider.
• In the end, select the frequency of the contribution which is Monthly, Quarterly, Half-yealy and Yearly.
• The ClearTax EPF Calculator will show you the EPF funds that will be available to you at retirement.

Benefits of using the EPF Calculator

• The EPF Calculator shows you the accumulated amount in your EPF fund at retirement. You get an idea of the retirement corpus, which helps you manage other investments in a better manner.
• You may use the EPF Calculator to increase your contribution towards retirement. If you feel the corpus accumulated at retirement is not enough to meet your requirements, then increase the percentage of your contributions to get a bigger corpus at retirement.
• The EPF Calculator is easy to use and shows the EPF corpus at your retirement in seconds.
• The EPF Calculator helps you to plan your retirement. You can increase the contribution percentage if you want to retire at an early age. You get an idea of the EPF corpus at different retirement periods, which helps you get the finances for early retirement.

What must you know about EPF contributions?

• EPF contributions are not taken only from your salary. Your employer is also bound to make equal contributions to your EPF account every month.
• Employees must link the Aadhaar number and the bank account with the UAN.
• You can nominate anyone for your EPF account. In case of the account holder’s demise, the nominee will pay the account balance.
• You can change the nominee by submitting Form 2 to your company’s finance department or the EPFO department.
• About 8.33% of your employer’s monthly contribution (up to Rs 1,250) will be redirected to the Employee Pension Scheme (EPS). This will help you get a monthly pension once you retire and fulfil certain conditions.
• If you decide to quit your job and withdraw the balance from your EPF account once and for all, you will only be able to remove a portion of the amount based on the purpose of withdrawal. Some valid reasons are unemployment, retirement, purchase of land, purchase/construction of a house, renovating a house, wedding, education, repaying a home loan, and medical reasons.
• If you are a retired person and have had continuous employment for the last 10 years, you can withdraw 100% of the EPS account balance.
• In case, you don’t have continuous employment for the last 10 years, you can only withdraw money from the EPS account, according to the slabs based on your previous drawn salary as mentioned in the Table ‘D’ below:

*Effective from 10 June 2008 as stated by the EPFO website. Irrespective of the last drawn salary, the maximum salary considered for this calculation is Rs 15,000. Therefore, if your last drawn salary is Rs 42,000 and you have worked for eight consecutive years, the EPS amount you can withdraw is Rs 15,000 * 8.22 = Rs 1,23,300.

• You don’t have to withdraw the EPF contributions or close the account when you switch jobs. Just provide your UAN to the new employer. The new PF number created by your new employer will still be under your existing UAN.
• You must manually transfer the PF account balance from your previous employer to the PF account created by your new employer by filling Form 13. Alternatively, you can fill Form 11 to transfer the PF contributions to the new account automatically.
• You can check your EPF account balance, transfer request, claim status, request to withdraw, and raise grievances online using the EPFO portal or even on the UMANG app.

How to check PF balance?

Step 1: Visit the EPF portal and click on ‘e-Passbook’ option available on the homepage.

Step 2: Enter your UAN number, password, captcha and click on the ‘Sign In’ button.  

Step 3: Click on the ‘Passbook’ option.

Step 4: Select the ‘Member ID’ and your PF balance will be displayed on the screen.

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