How to Calculate PF Interest - Why no interest for Pension Contribution?

Hi Seniors,

I have a doubt based on the calculation of interest rate 8.65% per month contribution:

- Employee Share PF Contribution: Rs. 672
- Employer Share PF Contribution: Rs. 206
- Pension Contribution: Rs. 466

Even after 5 months of contribution, I received the following interest amounts updated up to 31.03.2017:

- Employee Share Interest amount: Rs. 48
- Employer Share Interest amount: Rs. 15
- Interest Amount for Pension Contribution: Rs. 0

Why is there no interest for the Pension Contribution? Kindly guide me on calculating the Interest Amount.

Thank you.

Dear Ranjeetha MP,

Employer and employee shares in PF belong to the member. Hence, when it is deposited with EPFO, they have to give interest to members. However, members have no claim on the pension fund as it is EPFO's property. Members can claim either a pension or withdrawal benefit, as the case may be. It has no connection with the deposit but depends upon the service, last drawn average salary, etc.

Abbas.P.S

Dear Ranjeetha,

The interest calculation is shown in the attached sheet as per the details provided by you. Mr. Abbas has already intimated you about other details.

Thanks, Vidyadhar Bhat

Dear Sir,

Thank you so much, Abbas Sir and Vidyadhar Bhat Sir, for your explanation through the Excel sheet.

Thanks,
Ranjeetha.MP

Dear Sir,

Thank you so much, Abbas Sir and Vidyadhar Bhat Sir, for your explanation through the Excel sheet.

Thanks

Dear Sir,

My name is Anit Kumar, son of Ratan Singh. I work at India Yamaha Motor in Surajpur, Greater Noida, Uttar Pradesh. My UAN is 100978944644. My father's name is Mystic Shwo Ravindra.

Please write to me for help.

Thank you.

In the EPF calculator, we have used the 1st method for computing the employee and the employer contribution. Just to understand our methodology, let us take the following case:
1. Employees' Basic Pay + DA: Rs 25000
2. Employee contribution towards EPF: 12%*25000 = Rs 3000
3. Employer contribution towards EPF = 3.67% of 25000 = 3.67%*25000 = Rs 917.50.....(A)
4. Employer contribution in Employee Pension Scheme (EPS): 8.33% * 15000 = Rs 2082.50 .....(I)
ID – Paytek, a payroll software designed by experts keeping in mind the essential needs of organizations is a very powerful HR management tool that takes care of all core HR activities in an organization.
Regards
Abid
https://www.idbssoftware.com/hr-payroll-software.php

Dear Sir,

There are a few corrections needed regarding the contribution. EPS contribution should be restricted to Rs. 1250/- (Max. wages Rs. 15000), and the difference amount will go towards the Company's contribution. In the specimen, you have mentioned EPS wages as 15000, but the calculation is based on 25000/-, resulting in Rs. 2082.50.

All other details will be entered into the Excel file for EPF interest calculation.

Thanks,
Vidyadhar Bhat

For calculation of contribution to ESI, we should use the ROUNDUP function in Excel; otherwise, it will not tally with amounts shown by ESI System. =ROUNDUP(gross_salary*1.75%, 0).

There is a problem with the Employer's contribution:

After uploading the Excel sheet, the system displays the total contribution by the employee and employer. It is easy to check the employee's contribution. But there is no way of matching employee-wise contributions made by the employer before payment of the challan. It is only after payment that I can download the details.

Any solution to this will be appreciated.

Dear [Recipient],

Please note that the Employer Contribution is payable on Gross ESI Wages (inclusive of Gross Wages of all ESI Covered Employees). Before uploading the data in the portal, calculate the approximate Employer Share of Contribution at 4.75%. The portal is programmed to calculate accurately. You have to round off the Employee & Employer Contribution to the nearest Rupee before uploading the data.

Thank you.

Best regards,
[Your Name]

Hi all,

Interest rate of EPF accounts is being increased from 8.55% to 8.65%. Notification is awaited.

The EPFO sent out instructions to all regional offices to supply a detailed working sheet of settlement from EPF accounts. Read the circular attached.

I am having trouble understanding how Pf is calculated. Could someone please help me?

Hi Mrunali,

PF is calculated on the basic salary of the employee. The employee contribution is 12%, and the employer contribution is 12% (3.67% for EPF and 8.33% for Pension).

Employee contribution: 12/100 * 8000 = 960/- per month

Employer contribution:
- 3.67/100 * 8000 = 293.6
- 8.33/100 * 8000 = 666.4
Total employer contribution: 960/- per month

Regards

Hi Mrunali,

PF is calculated on the basic salary of the employee. The employee contributes 12%, and the employer contributes 12% (3.67% - EPF and 8.33% - Pension). For example, if the basic salary is 8000/-, the employee's contribution would be 12/100*8000 = 960/- per month. The employer's contribution would be 3.67/100*8000 = 293.6 and 8.33/100*8000 = 666.4, then the employer's PF would be 960/- per month.

Regards

EPF interest is calculated on a simple interest basis or compound interest basis. Is there any rule, circular, or notification in this regard.