PF Scheme / This is the magic of PF, a fund of 5 crores can be created from a salary of 50 thousand

PF Scheme: The central government has launched a new Provident Fund (PF) scheme for employees working in the private sector, which provides a strong basis for financially securing their old age. Not only private sector employees, but also government employees can invest in this scheme. However, its main objective is to provide financial stability to private sector employees. Let us know how this scheme works and how a person with a monthly salary of Rs 50 thousand can create a fund of Rs 5 crore.

Structure of PF Scheme

Under this scheme run by the Employees' Provident Fund Organization (EPFO), 12% of the employee's monthly salary is deposited in the PF account. Along with this, the employee's company also deposits the same amount (12%) from its level. In this way, a total of 24% of his salary is deposited in the employee's PF account every month. The interest rate prescribed by the EPFO ​​applies to this fund, which is revised from time to time.

Change in interest rate

Recently, EPFO has revised the interest rate given on PF. Earlier this rate was 8.15% per annum, which has now been increased to 8.25% per annum. This increase will prove beneficial for the employees, as it will accelerate the growth of their fund.

How will a fund of Rs 5 crore be created?

Let us understand this through an example. Suppose, your monthly basic salary is Rs 50,000 and you start a job at the age of 30. According to the rules of EPFO, a total of Rs 12,000 will be deposited in your PF account every month, including 12% of your salary (ie Rs 6,000) and 12% of the company (Rs 6,000). Along with this, if your salary increases by 10% every year and an interest rate of 8.25% is applicable on PF, then at the time of retirement (at the age of 58) you will have a large fund ready.

Calculation Maths

• Monthly contribution: Rs 12,000 (6,000 + 6,000) from both employee and company
• Annual contribution: 12,000 × 12 = Rs 1,44,000
• Salary increase: 10% per annum
• Interest rate: 8.25% per annum (compound interest)
• Investment period: 28 years (30 to 58 years)

Based on this calculation, after 28 years your PF fund will reach Rs 5,13,74,057. This amount will not only make your retirement secure but will also provide you financial independence.

Benefits of the scheme

• Financial security: This scheme provides financial support in old age for private sector employees.
• Double contribution: The fund grows rapidly with the contribution of both the employee and the company.
• Tax benefits: Investment in PF is eligible for tax exemption under Section 80C of the Income Tax Act.
• Safe investment: As this scheme is run by EPFO, it is completely safe.

Who can invest?

• Employees working in private companies with 20 or more employees.
• Government employees can also invest in this scheme.
• There is no minimum salary limit, but the maximum contribution limit is determined by EPFO.