Why Start Planning for Retirement Early?
By budgeting for retirement individuals can be assured of a good life once they are out of service. If one begins early and selects the right investment plan for life which can include EPF (Employees provident Fund) among others one is confident of planning well for life.
What is EPF and Why is it Important?
EPF is a retirement saving scheme in India under the Employees Provident Fund Organisation (EPFO). EPF has always been accepted as a safe investment for salaried class people to invest for their retirement. With 10,000 in basic pay for example an employee can actually have a large amount saved for retirement.
The Way EPF Gives Their Members the Guaranteed Returns
Unlike market related ETPs, EPF provides guaranteed return with better interest rate than many other savings product types. This makes EPF as more secure option for accumulation for retirement corpus for investors who would be looking for a fixed regular income after retirement.
The Procedure for Contributing to the EPF
In EPF, there are contribution both from the employee and the employers side. Currently 12% of the employee’s basic salary is taken and the employer is expected to contribute a similar amount. This way, the employee’s EPF account accumulates over and over again.
Employee Contribution: for basic salary of ten thousand, twelfth of the basic pay or one thousand and two hundred separated for medical allowance.
Employer Contribution: 8.15% to employer and employee both under the EPF and Miscellaneous Provisions Act 1952, 12% for the Pension Scheme of EPF and 33% for the Employee Pension Scheme (EPS).
Eligibility for EPF
EPF is only applicable to organizations with 20 employee and above as requirement for employees to qualify for the scheme. Nevertheless, through the following register, organizations with less employee capacity than 20 employees can also register voluntarily. EPF is mandatory to employees who earn up to 15,000 per month but those earning more can contribute voluntarily.
When Can You Withdraw EPF?
EPF savings may be withdrawn upon retirement, but only if you satisfy certain requirements, or whenever you quit the job.
