There are some savings that we make without our knowledge. Sounds surprising? but thats what is the reality. An employee in an organized sector have mandatory savings like PF,Employer Pension Scheme,Superannuation,Gratuity. From our monthly gross salary, we make a significant contribution to all four of these. Lets see how much we are saving each month unknowingly in a provident fund.
For all employees who work in an organized sector, following is the PF contribution every month.
PF contribution by Employee = 12% of basic salary.
PF contribution by Employer = 12% of basic salary.
Employer Pension Scheme
Out of 12% contribution from employer, 8.33% of the contribution (subject to maximum of 541 rs/month) is invested in employer pension scheme.
Lets take an example and understand this.
Ram's basic salary per month = 15,000
Ram's contribution to PF = 12% of 15,000 = 1,800
Ram's Employer contribution = 12% of 15,000 = 1,800
Employer's contribution to EPS = 8.33% of 15,000 = 1250
This 1250 is higher than the max limit of Rs 541/month and hence
Employer's contribution to EPS = 541
Employer contribution to PF = 1800-541 = 1259
So Total PF contribution to Ram's PF account per month = 1800 + 1259
How to calculate your PF balance?
Lets say Ram worked in a firm from April 2007 to March 2008.Let us find out what is his balance as on April 1st 2008.
Interest Rate on PF account = 8.5% (fixed by central govt)
So monthly contribution of 3059 for one year @ 8.5% =~ 40,000 (not exact figure)
So in this way you can calculate your return for 'n' number of years for your PF contribution, provided you know your monthly contribution.
I would insist on the readers to get to know their monthly contribution towards PF from your payslip and also collect your PF account statement every year.