Understanding PF Withdrawal: Does Your Provident Fund Really Double Over Time?

Dear User,

The correct term is "HR's" instead of "HR's."

There is a misconception or fact (I am also not aware) that employees believe the PF amount doubles at the time of withdrawal. Can anyone guide me on this, and how can I calculate the person's full PF amount, i.e., (government + employer contribution), from their joining date until the current date?

Thank you.

Satish,

The contribution towards EPF by the employer and employee is the same, i.e., 12% is contributed by the employer, and the employee contributes the same percentage towards EPF. That is what the employee assumes, making the amount double.

Calculations: P.F from Basic

Employee: 12% (P.F)

Employer: 3.67% Provident Fund (A/c 1) + 8.33% Pension (A/c 10) + 1.10% Admin Charges on PF (A/c 2) + 0.50% EDLI (A/c 21) + 0.01% Admin Charges on EDLI (A/c 22) => 13.61% on basic

* Pension (8.33% or 541/- whichever is less)

Every year, the Government declares the rate of interest for the EPF amount. In 2008-2009, the rate of interest was 8.50%, and in 2009-2010, the rate of interest is 8%.

This interest is given on the PF amount and not on EPS.

Regards,
Mohan

Dear all,

With the fixed deposit showing a wavering trend, PF is one of the safest ways of saving every year without having to pay any income tax towards the interest! So if you actually plan your PF (if Voluntary PF is also available), then at one point in time, one may be earning 2-3 lakhs as interest in PF, which gets added to one's corpus fund without realizing it. So if PF is a safe bet, which allows you to withdraw the amount based on emergency needs like marriage, house building, religious functions, etc., on a recoverable/non-recoverable basis. Thus, acting as an emergency fund as well!

Regards,

Premson

Dear Mr. Sathish,

For your kind information, there are no provisions in PF for doubling the amount. The employees believe that it is 12% from their contribution and 12% from the employer's contribution. That's it. Don't be confused. Is it clear right now?

Regards, R. Ramkishore