EPF account- It is often heard that some savings of salaried class can be done through provident fund. Because, it cuts directly from salary.
Who does not want them to earn more, save more and spend life in the rich after the retirement. However, most salaried classes worry that no matter how much they earn. In such a situation, where to invest for retirement. It is often heard that only some savings of salaried class can be done through Provident Fund (EPF Account). Because, he is also deducted from salary. But, do you know that the funds of provident funds can also be doubled. There are two benefits from this. First, your retirement corpus grows. The more the second deposit, the more interest will be received on it. Most companies within the EPFO offer the chance that you can double your PF contribution. Just for this, you have to change your salary structure.
Especially the month of April is very special for those working in private. Generally, in the private sector, this month companies make changes in the salary structure of all the employees. This is the time of appraisal in companies. If you are also employed, then you can also double the EPF money from this month. You can get your employer to increase PF contribution to EPF Account. This will definitely reduce your in-hand salary. But, there will be a good option in terms of savings and tax.
How EPF contribution will increase
If the employer increases your EPF contribution, then more money will be deposited in your provident fund (EPF Account) every month. This can double your corpus at the time of retirement. Currently, the provident fund (EPF) earns 8.55 per cent interest. If the contribution will increase, you will also get more interest. However, it has to be kept in mind that your annual contribution should not exceed 2.5 lakh rupees. After the provisions made in the budget 2021, the interest on deposits above Rs 2.5 lakh will be taxable.
What does the EPFO rule say
According to AK Shukla, former assistant commissioner of the Employees’ Provident Fund Organization, the EPFO rule gives an exemption to every employee that he can ask his company to increase his PF contribution. He is given this exemption under the Employee provident fund act. In Provident Fund, 12% of basic salary and DA is deposited in the employee’s share. This much contribution is from the company. As per rules, any employee can increase his monthly contribution up to 100% of basic salary.
Now understand how PF money will double?
If any employee doubles the contribution (EPF contribution) in his month, then the amount of his EPF fund itself will be doubled. For example, in the current system, 12% PF is contributed on basic salary. But, if the employee increases it to 24 per cent, then the fund will also double.
Compounding will benefit
Interest received on EPF is compound interest. Therefore, there is also an opportunity to earn more interest every year by accumulating more money. The interest on PF is calculated by the compound interest formula. You will also get the benefit of interest on interest every year. In this way, a thick fund will be ready for your retirement.
