EPF Interest Rate at 8.15%: Check how to calculate retirement fund
: The government approved an interest rate of 8.15 percent for the Employees' Provident Fund (EPF) scheme for the fiscal year 2022-23.
This announcement was made by the retirement body Employees' Provident Fund Organisation (EPFO. It directed all filed offices to credit the interest at a rate of 8.15 percent on EPF for FY23 into the respective accounts of its members.
What is EPF?
The EPF or Provident Fund (PF) is basically a retirement savings fund where both employers and employees contribute towards the future financial security of the employee.
It is mandatory for employers with at least 20 employees to have EPF accounts for all their workers. Each month, an employee contributes 12 percent of their basic pay and Dearness Allowance to the EPF account.
On the other hand, the employer matches this contribution with an equal amount. Of the 12 percent contributed, 8.33 percent goes towards the Employee Pension Scheme, while the remaining 3.67 percent is directed to the EPF.
How is EPF interest calculated?
The EPF offers a guaranteed return and the interest rate on the EPF scheme is set by the EPFO every year, varying 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 increases, and it begins 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.
EPF calculator
An EPF calculator is a valuable online financial tool that can estimate the total amount you will have in your EPF account upon retirement.
Several leading financial services portals like Groww and ClearTax offer EPF calculators where you have to feed in basic details like age, basic monthly salary, dearness allowance, monthly EPF contribution, and desired retirement age.
Using this information, the calculator can determine the accumulated corpus through EPF available to you at retirement.