Employee Provident Fund (EPF) is a scheme in which you can create wealth throughout your working years as an employee at a government or private organisation. This amount earns interest, and you can use it to finance a part of post-retirement life or other goals. In this scheme, both you and your employer make contributions towards your PF. You can claim the entire amount at the time of your retirement or two months after changing your job. You and your employer need to transfer 10% or 12% of your basic salary to contribute towards EPF. However, if you are a woman, you only need to contribute 8% of your basic salary for the first three years. During this period, your employer’s EPF contribution will remain 12%. For sick units or establishments with less than 20 employees, the rate is 10% as per Employees’ Provident Fund Organisation’s (EPFO) guidelines. Also, as per Budget 2018, the rate of interest applicable on EPF is 8.65%. To better understand how EPF can help you, take a look at how you and your employer contribute to it.
EPF contribution
EPF contribution is divided into two parts.
Contribution by you
- Male employees must contribute 10% or 12% of their basic salary.
- Female employees must contribute 8% of their basic salary for the first three years. Thereafter it becomes, 10% or 12% of the basic salary.
Contribution by your employer
- Your employer must contribute an amount equal to 10% or 12% of your basic salary towards EPF.
- For female employees, the government contribution doesn’t change.
This basic rate of EPF is further sub-divided.
- Employee’s Provident Fund (EPF): 3.67%
- Employee’s Pension Scheme (EPS): 8.33%
- Employee’s Deposit Link Insurance Scheme (EDLIS): 0.50%
- EPF Administration charges: 1.10%
- EDLIS Administration charges: 0.01%
