Pension Calculator: How to Calculate your Contribution?

EPF or employee provident fund is a retirement plan for employees in the private sector similar to the pension scheme for the government sector employees. An organisation with twenty or more employees has to register itself with EPFO or Employee Provident Fund Organisation compulsorily.

Under this scheme, both an employee and the employer have to contribute 12% towards the plan. While the employer’s 12% contribution is divided between 8.33% for EPS and 3.67% for EPF, the employee has to contribute 12% of his total salary, including the dearness allowance. So, for instance, if an individual earns Rs.25,000 monthly, he or she will have to contribute 12% of 25,000, which is Rs.3,000.   

How to calculate the pension amount

One can use an EPF or pension calculator, which is an online tool to calculate the approximate amount that they will receive on their retirement. To figure this final maturity amount one has to submit specific details. These include –

  1. Employee contribution
  2. Employer’s contribution
  3. Current age
  4. Tentative retirement age
  5. Current balance in EPF account
  6. Rate of interest
  7. Growth rate in EPF contribution ( this is the percentage at which one expects their salary to increase)

The interest rate based on which interest is compounded on funds in EPF account is decided jointly by the government of India and EPFO’s board of trustees. This interest rate is revised every year; hence while calculating maturity amount using a pension calculator, you should enter the interest rate for this present financial year.

How to check your current balance in an EPF account

You can check current balance in your EPF account by following the below-mentioned steps.

  1. Visit the official EPF website.
  2. Enter your state and a regional branch of your PF office.
  3. Fill in the online form and enter your EPFO account number.
  4. Submit your application form after carefully verifying all the details.
  5. The current balance in your account will be sent to you in SMS form to your registered mobile number after you have submitted the application form.

Aside from using the pension calculator to gain an idea about the approximate maturity amount that one will receive on retirement, he or she should also know the different benefits offered by EPF account.

Features of Employee provident fund

  1. Even though an employee contributes only towards their EPF account, they can avail both EPF and EPS after retirement.
  2. Premature withdrawal from EPF account is allowed in certain situations such as unemployment, wedding, medical treatment.
  3. Any residual amount in the EPF account will be handed over to a nominee in the unfortunate case of account holder’s demise.
  4. Under certain provisions made in the voluntary provident fund, employees can contribute more than the mandatory 12%. 
  5. One can avail a life insurance cover with EPF.

An individual can withdraw the full amount in their EPF account after retirement or if they are unemployed. If you are thinking about where to invest this amount, keep in mind that diversification is the key. 

One can follow the online procedure while withdrawing the amount in their EPF account. 

Nevertheless, to claim your PF amount via the online procedure, one should have the following –

  • PAN and Aadhaar linked with EPF account
  • Bank account details related to UAN or universal account number.
  • Active UAN number

Follow these steps below to claim your EPF amount –

  1. Go to the UAN website and log in using your password and UAN.
  2. Select ‘claim’ option from a drop-down menu on this website.
  3. After verifying your member details, click yes and sign the certificate of the undertaking.
  4. Then select ‘proceed for online claim’. Click on PF advance or form number 31.
  5. Give reasons for withdrawal, address of your employee and the required amount.
  6. Submit your claim application and furnish all required documentation. This documentation will depend based on the purpose that you have mentioned earlier.
  7. After completing the above steps, your claim will be processed and the amount sent to your bank account.

One can also increase their retirement savings by investing their EPF amount in fixed deposit. 

Nevertheless, to earn substantial interest rates, one should go for financial institutions that offer the best fixed deposit interest rates. This is why you should know how to pick the right financial institution for a fixed deposit. 

One can use an online fixed deposit calculator similar to a pension calculator to calculate the interest to streamline their financial plan.

Gaurav Khanna

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.

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