The Employees' Provident Fund (EPF) calculator will help you to calculate the amount of money you will accumulate on retirement.
How to use it
To arrive at the retirement corpus, you need to enter few details such as:
" Your present age and the age when you wish to retire.
" Your basic monthly salary, your expected average annual increase in basic salary.
" Your (employee's) contribution to EPF and your employer's contribution.
" The interest rate earned on the EPF balances as declared by the government each year.
What it shows
After entering the above information and submitting it, the calculator will show how much you will save by the time you will retire. The statement will read as - "You will have accumulated X amount by the time you retire."
How the result arrived at
This is how the calculations work: The Contributions are made on a wage ceiling (Basic Salary + DA) of Rs 15,000. However, when the current income exceeds the wage ceiling, three standard methods are employed for calculating the contribution amount. The employer is free to use any one of the methods.
Once the contributions of the employee and the employer are computed, we calculate the interest on the contribution. The interest is computed on the opening balance of each month. As the opening balance for the first month is zero, the interest earned on the 1st month is zero as well. For the second month, interest is computed on the closing balance of the 1st month which is the same as the opening balance of the second month. The closing balance of the 1st month is calculated by adding the employee's and the employer's contribution for the 1st month. Similarly, the interest for the 3rd month is computed on the closing balance of the 2nd month. The closing balance of the 2nd month is calculated by adding the closing balance of the 1st month and the employee as well as the employer contribution in the 2nd month.
The sum of the employee as well as the employer contribution at the end of the year is added to the sum of the interest earned in each of the 12 months of the year. The result so obtained is the closing EPF balance at the end of the year. This amount becomes the opening balance for the 2nd year. The interest in the 1st month of the 2nd year is computed on the opening balance of the 2nd year.
Total EPF balance at the end of the year = Balance at the end of 12 month (Employee plus the Employer contribution) + Sum of the interest earned in each month in the year