EPF Calculation: You might lose millions of rupees if you take your PF money out after changing jobs

 EPF Calculation: You might lose millions of rupees if you take your PF money out after changing jobs

EPF Interest Rate: Assuming you start work at age 20 and get a base income of Rs. 15,000, you would have worked for a total of 38 years by the time you retire at age 58. We will provide you with an estimate of your PF account strength based on this computation.

EPF Calculator: When changing employment, some individuals also take money out of their provident fund, or PF. However, it's possible that you are ignorant of the potential future costs associated with this error of yours. Indeed, if you have the same behavior, you are essentially gambling with your future and might lose millions of rupees as a result. If you additionally calculate the value of having PF funds in your account, you'll be astonished by how much it benefits you.

An accounting of 38 years of work

For those who are paid a salary, PF is the greatest option to save money. Each month, 12% of your base pay is put into your PF account. If your starting age is 20 years old and your basic income is Rs. 15,000 at the beginning of the employment, you would have worked for a total of 38 years until you retire at age 58. We will provide you with an estimate of your PF account strength based on this computation.

Rule PF

If an employee's base pay is Rs. 15,000, then 12 percent of that amount, or Rs. 1800, will be placed into their PF account each month by the employee. In addition, the employer is required by law to pay 12%. Of this, 8.33% (or Rs. 1250) will be placed in EPS and 3.67% (or Rs. 550) of the basic income would be deposited in PF. This implies that the employee's PF account would receive a monthly payment of Rs 2350 in addition to their pension.

Each month, Rs. 2350 will be put into the PF account.

PF currently has an interest rate of 8.15 percent. This rate was 8.10 percent before. We compute 38 years of work at an 8.10 percent rate alone. In 38 years, if your pay grows by 5% annually, Basic and PF will also rise in proportion. Let's say your base pay is Rs. 15000 and, in accordance with EPFO regulations, Rs. 2350 is put into your employee's PF account each month.

At the time of retirement, Rs 1.73 crore

In the first ten years, this sum stays lower if the calculation is done with a 5% annual increase. However, the longer you preserve it, the greater the gain. Groww's EPF Calculator predicts that at retirement, this sum will rise to Rs 1.73 crore. This computation was performed using an annual rate of 8.1% with annual increases of 5%.

It is crucial to remember that transferring your PF funds rather than withdrawing them would be more advantageous for you in the event that your employment changes. It may be combined with your UAN. This is a rather simple procedure. After retirement, funds from PF accounts are often accessible for withdrawal. Try managing your finances from someplace else if you need money. However, do all within your power to avoid having to take out PF funds.

In addition, bear in mind that you will not be required to pay taxes when you take money from your PF account if it has been more than five years after the account was created. Tax will be withheld from your withdrawal if your PF account has been active for less than five years.