How much amount will you get on EPF withdrawal
When I got my EPF amount in my bank account, I was not sure whether its the right amount I claim. I have got the amount in 2 portions so I thought one would be the employee's contribution and the other would be employer's. But that way the calculations didn't match. Its only after a day of many failed attempts that I could match my amount correctly with my calculation. And what a joy it was! I got to know that one portion was the total EPF portion (i.e. my EPF contribution + employer's EPF contribution) while the other was the EPS (Employee Pension Scheme) portion.
After becoming EPF enlightened, I thought of sharing my wisdom ;) with you. If you want to calculate your EPF amount, here are the steps -
Find out your PF contribution. It appears usually as 'PF deduction' in your salary slips. It will either be (a) 12% of your (basic + DA(if any)) or (b) 12% of Rs 15000/- i.e. Rs 1800/- (Rs 780 before Sep 2014)
Find out employer's PF contribution. It is usually mentioned in the offer letter. If not there, ask your employer. It will either be (a) 12% of your (basic + DA(if any)) or (b) 12% of Rs 15000/- i.e. Rs 1800/-
Out of the above 12%, 8.33% goes in Employee Pension Scheme subject to a maximum of Rs 1250/- (Rs 541 before Sep 2014). So the actual amount that goes in EPF from employer's contribution is 3.67%. If your employer is contributing Rs 1800/- (12% of Rs 15000/-), then EPF portion will be 3.67% of 15000/- i.e. 550/-. While if your employer is contributing 12% of your (basic + DA(if any)), then EPS being capped at 1250/- , EPF portion will be = 12% of basic - 1250/-
The interest on EPF is calculated as simple interest on monthly contributions and round to nearest rupee and then compounded yearly.
Example EPF Calculation:
Lets say my EE as well as ER contribution is 1800/- Out of employer's 1800/-, only Rs 550/- are going into EPF while the remaining Rs 1250/- are going into EPS. Lets say I joined in Nov. The interest calulation on my contribution for the first 5 months of employment is given below :
|Date||Accumulated Employee Contribution||Monthly Interest @ 9.5%|
|1-Dec||1800 (This amount is the contribution of November which got submitted in PF account on 1st Dec)||0 (No interest earned as on 1st Dec because there was no PF balance before this date)|
|1-Jan||3600 (This amount is the contribution of Nov. and Dec. both : 1800+1800=3600)||14.25 (Interest is calculated on the amount which was there in the account before this date: 1800*9.5% /12)|
|1-Feb||5400 (3600+1800=5400)||28.5 (3600*9.5% /12)|
|1-Mar||7200 (5400+1800=7200)||42.75 (5400*9.5% /12)|
This means my total contribution for the whole financial year is 7200/- and the interest is 85.5/- . The interest will be added to the contribution at the end of the financial year. So next year 7200/- + 85.5/- will become my opening balance and the calculation will go on like this. Similarly employer's contribution is calculated below:
|Date||Accumulated Employer Contribution||Monthly Interest @ 9.5%|
|1-Dec||550 (This amount is the contribution of November which got submitted in PF account on 1st Dec)||0 (No interest earned as on 1st Dec because there was no PF balance before this date)|
|1-Jan||1100 (This amount is the contribution of Nov. and Dec. both : 550+550=1100)||4.35 (Interest is calculated on the amount which was there in the account before this date: 550*9.5% /12)|
|1-Feb||1650 (1100+550=1650)||8.7 (1100*9.5% /12)|
|1-Mar||2200 (1650+550=2200)||13.06 (1650*9.5% /12)|
This means employer's total contribution for this whole financial year is 2200/- and the interest is 26.11/- . So next year 2200/- + 26.11/- will become the opening balance and the calculation will go on like this.
Note: To know the EPF interest rates for a particular year, see this post : EPF Interest Rates
If you have filled the withdrawal option in Form 10C, you would get a EPS portion back. Here are some facts:
The EPS part (which is a part of the employer's contribution) does not earn any interest.
On EPS withdrawal you do not get the full EPS amount. The amount depends on number of years of service, and is not related to actual balance in EPS Fund. The withdrawal amount is governed by Table ‘D’ (given below).
The fraction of service for six months or more is treated as one year and the service less than six months is ignored. So 3 years and 6 months will be rounded upto 4 years and 3 years, 2 months will be rounded to 3 years.
|Years of Service||Proportion of wages at exit|
Example EPS Calculation:
I had completed 1year 5 months in my previous company, so for the purpose of EPS calculation my 'years of service' will be counted 1 year. My monthly salary was > Rs 15000 per month but for purpose of EPS only Rs 1250 p.m or Rs 15000 annually is considered. So the EPS amount that I got back was 1.02*15000 = Rs 15300/-
With the above information on your fingertips, I hope you would be able to solve your EPF - EPS mystery. Wish you good luck!
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