12% of my basic salary is contributed to the EPF account every month. An equal amount is also contributed to the EPF account by my employer. Both these contributions are part of my overall salary(or cost to company).
8.33% of the employer’s contribution is deposited into the Employees’ Pension Scheme (EPS), which is intended to provide a pension after the retirement age of 58. The upper cap on EPS contribution is Rs. 1,250 per month.
More details about EPS can be found at -> https://www.paisabazaar.com/saving-schemes/employees-pension-scheme/
Returns:
| FY | EPF corpus | EPF Interest |
| 2010-11 | 51,549 | 474(9.5%) |
| 2011-12 | 1,54,313 | 7,777 (8.25%) |
| 2012-13 | 2,79,985 | 17,212 (8.5%) |
| 2013-14 | 4,41,535 | 29,602 (8.75%) |
| 2014-15 | 6,43,788 | 44,899 (8.75%) |
| 2015-16 | 8,82,092 | 63,608 (8.8%) |
| 2016-17 | 11,65,223 | 83,911 (8.65%) |
| 2017-18 | 15,13,265 | 1,08,642 (8.55%) |
| 2018-19 | 19,53,150 | 1,40,802 (8.55%) |
| 2019-20 | 24,72,970 | 1,82,088 (8.65%) |
The total interest generated so far is Rs. 6,79,015 and it will continue to grow exponentially over the next 3-4 years until I retire. The current EPF corpus is already generating a tax-free interest of ~ Rs 19,358 per month.
Benefits:
- I don’t need to save for investing in EPF. It’s a mandatory contribution that my employer has to do as per the existing rules.
- My investments are exempted u/s 80C.
- EPF grows silently with a good interest rate( >8.5% since last 7-8 years) with the added advantage of compounding.
- EPF withdrawals are tax-free after completing 5 years of service with a company.
For FY 2018-19, the interest rate for EPF has been raised by .1% i.e. from 8.55% to 8.65%.
For FY 2019-20, the EPF interest rate was lowered to 8.50%.
For FY 2020-21, the EPF interest rate was maintained at 8.50%.
Please share your thoughts and experiences with EPF in the comments section.
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