The retirement benefit program, Employee Provident Fund (EPF), is overseen by the Employee Provident Fund Organization (EPFO). Throughout the job, the employer and the employee contribute to the plan. The employee can withdraw the same at the time of the employee’s retirement. To calculate the corpus they would receive at retirement; one can use an EPF calculator. Online EPF calculators are accessible and free to use.
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What is EPF?
The Employee Provident Fund (EPF) is a pot of money to which the company and the employee make monthly contributions. It is a program that offers post-retirement financial assistance to all salaried workers.
This plan is supported by the Employees Provident Fund Organization (EPFO). Organizations with more than 20 employees are required to register under the EPF Act.
An employee must contribute a specified amount from his paycheck to an EPF scheme. However, the employer also contributes the same amount. This monthly contribution helps provide the employee with financial benefits after retirement.
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Essentially a retirement benefit plan, EPF seeks to guarantee a financially secure retirement.
Features and Benefits of EPF
The Employee Provident Fund’s (EPF) goal is to increase retirement savings. For those who get a salary, it functions as a savings plan. With the help of this plan, an employee and an employer can each contribute to the corpus.
The provident fund, pension, and insurance benefits are available to employees under the EPF Act.
The EPFO administers the Employees Provident Fund Scheme (EPF), Employees Pension Scheme (EPS), and Employees Deposit Linked Insurance Scheme under the EPF Act (EDLI).
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The following list includes some of the essential elements of EPF:
- The employee may withdraw the fund before it matures during an emergency, like a health or financial emergency.
- Any member of an employee’s family is eligible to be nominated. The nominee might therefore claim the corpus built at the time of the employee’s passing. This will help the family in resolving any financial difficulties if the employee is the only source of income.
- The employee has two months from the date of resignation to withdraw any accumulated funds from the EPF fund.
- Along with EPF, the employer also contributes to the employee’s pension scheme. This is usable by the employee after their retirement.
- A life insurance policy is also provided to employees through the EPF Fund. As a result, the nominee may file an insurance claim in the event of the employee’s death.
- Under the guidelines of the Volunteer Provident Fund, an employee may also contribute more to the EPF Fund than the minimum 12 percent of his basic salary.
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Benefits of EPF
EPF offers a wide range of advantages to workers. However, the company and employees contribute little to help the employee achieve complete financial security and freedom after retirement. EPF is meant to give them a sense of protection for the future instead.
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The Employee Provident Fund offers the following advantages:-
- Corpus for Retirement: Employees must contribute 12 percent of their basic salary to the EPF plan. The lump sum amount built in this manner will help the employee in their retired life. This arrangement allows an employee to live a stress-free life after retirement.
- Emergency Corpus: The EPF program helps overcome unanticipated situations such as those involving health and finances. They can utilize the funds in their EPF account when such un ties in life arise.
- Premature Withdrawal: Withdrawals from the EPF are simple and hassle-free. Employees can withdraw money from the fund in an emergency before it matures. In an emergency, employees may also make partial withdrawals.
- Tax Saver: Any interest earned under the EPF Scheme is tax exempted. Returns from the EPF are tax-free. Any withdrawals made following the fund’s maturity are not subject to tax. Under section 80 C of the Income Tax Act, any contributions made by the employee to the EPF Fund are tax deductible. Also, any money withdrawn after five years of service is tax-free and does not incur a TDS deduction.
What is an EPF Calculator?
An online tool called the EPF Calculator helps determine the EPF amount you receive at your retirement. Simple information is required, such as your retirement age, a basic monthly wage, yearly salary increase, and EPF contribution.
You can make your retirement plans using the maturity value at retirement. Then, you can calculate whether this final amount will be sufficient to cover your retirement needs. In light of this, you can consider whether you need to increase your investment in other investments to suit your needs.
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