EPFO: How does EPF calculator works; how to get Rs 7,071 as monthly pension after retirement

If you work in the organised sector, most private sector employees are eligible to earn post-retirement benefits. Be aware that, unlike their counterparts in the private sector, employees of the government are also entitled to pensions. After the EPF Act was approved by Parliament, the Employee Provident Fund was established. According to the law, the Employees Provident Fund Organisation of India (EFPO), which is identified by a UAN or Unique Account Number, is in charge of the money that both the employer and the employee put in a permanent account. You can accurately assess your savings with the aid of an EPF calculator.

What is EPF?
EPF, also referred to as PF (Provident fund), is a retirement savings system to which both employers and employees make contributions. EPF accounts must be provided for employees by employers with at least 20 workers. Nonetheless, certain businesses with fewer than 20 staff members might also assist their workers in opening EPF accounts.

How does EPF works?
An employee is required to contribute 12% of their monthly basic and dearness pay to the EPF. The employer matches this payment and makes a similar contribution. 8.33% of the 12% go to the Employee Pension Plan, while 3.67% go to the Employee Pension Fund. Nonetheless, 12% of the employee's overall contribution goes to the EPF.

What is an EPF calculator?
A financial calculator that displays the total amount of money in your EPF account after you retire is called the EPF or PF calculator. You may calculate the entire amount that has accrued in your EPF account, which includes the contributions that you and your employer have made as well as any interest that has been generated.

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EPF formula- Your age, basic monthly pay, PF contribution in per cent, employer contribution in per cent, anticipated average annual salary increase in per cent, retirement age, and interest rate are the only pieces of information you must provide. The amount you could save for retirement can be checked after submitting all the required data.

The maximum amount that an employee may contribute to their EPF account is 12% of their Basic Salary plus Dearness Allowance. The employer makes an equal 12% contribution, of which 8.33% goes to EPS and 3.67% goes to the employee's EPF account. 

The formula for calculating EPS pension = “Pensionable Salary X Pensionable Service)/70”. 

If you decide against choosing the higher pension, the EPS pension is determined using the average pensionable salary for the previous 60 months as of the retirement date. For instance, if you started working for EPS at age 25 and retired at age 58, you may receive a monthly pension of Rs. 7071 [(Rs. 1500033)/70].