Employee Provident Fund is essential for all the Private Sector Working Employees to secure their Retirement Life. Earlier we have discussed How to Register for UAN Number and after that, we have gone through UAN Activation Procedure. Now In this Post, we are going to Discuss Complete EPF Interest Rates Calculation and EPF Contribution in Employees PF Account because Majority of the Workers doesn’t know How to Calculate their EPF Interest.
Currently, the Interest Rate is 8.65% on EPF contributions made by the employer and the employee. To know the EPF Calculation first we have to Understand PF Distribution Structure.
Division of EPF Contribution for Employee
EPF Contribution is divided into Two Parts.
- Employee Contribution
- It’s Deducted from Employee’s Salary every Month. This is 12% of the basic salary of the employee.
- Employer Contribution
- The contribution made by the employer also is 12% of the basic salary of the employee. But this 12% is further subdivided into the five Parts –
- Employee’s Provident Fund (EPF) – 3.67%
- EPF Admin Charges – 1.10%
- EDLIS Admin Charges – 0.01%
- Employee’s Pension Scheme (EPS) – 8.33%
- Employee’s Deposit Link Insurance Scheme (EDLIS) – 0.50%
- The contribution made by the employer also is 12% of the basic salary of the employee. But this 12% is further subdivided into the five Parts –
Above Listed Contribution of Employee and Employer is only Applicable when the Employee’s Basic Salary Plus DA(Dearness Allowance) is Equal or Less than Rs.15000. If Employee’s Basic Salary and DA is Greater than Rs.15000 than there are 3 Possibilities.
- An employer may restrict your Contribution in PF as 12%.
- An employer may restrict your contribution as well as the company’s to Rs.15,000 per Year.
- An Employer may contribute towards EPF an amount equal to employee’s own contribution.
EPF Calculation Example
Let us take an example of Ram who has recently joined a new Company in the month of January. Let’s assume his monthly salary Rs.10,000 (Basic + DA). Now We can Calculate EPF Contribution by Employer with Current Interest Rates.
| Month | Employee Contribution (Monthly) (12%) | Employer Contribution (3.67%) | Balance at the end of month | Interest Rate Calculation |
| January | 1200 | 367 | 1567 (1200+367=1567) | Not Applicable because He just Joined. |
| February | 1200 | 367 | 1567+1567 = 3134 | 1567*8.75%/12 = Rs.11 |
| March | 1200 | 367 | 3134+1567 = 4701 | 3134*8.75%/12 = Rs.22 |
| April | 1200 | 367 | 4701+1567 = 6268 | 4701*8.75%/12 = Rs.34.27 |
| May | 1200 | 367 | 6268+1567 = 7835 | 6268*8.75%/12 = Rs.45.70 |
| June | 1200 | 367 | 7835+1567 = 9402 | 7835*8.75%/12 = Rs.57.13 |
| July | 1200 | 367 | 9402+1567 = 10969 | 9402*8.75%/12 = Rs.68.55 |
| August | 1200 | 367 | 10969+1567 = 12536 | 10969*8.75%/12 = Rs.79.98 |
| September | 1200 | 367 | 12536+1567 = 14103 | 12536*8.75%/12 = Rs.91.40 |
| Total EPF Balance at the end of the year | 10,800 | 3303 | 14103+1567 = 15670 | 410.03 |
From the Table We can see that on Rs.10000 Monthly Salary Employee Contribution at the Rate of 12% in Total is Rs.10800, Employer Contribution at 3.67% Rate is Rs.3303 Total Interest is Rs.410.03 in 9 Months.
Note:- Here EPF Contribution Calculation is Calculated in Rs. 10000 Basic+DA Income but if the Salary of Employee is Greater than Rs. 15000 then total Amount at the End will Change but the Calculation method and Contribution Structure remains Same.
New Rules in EPF Contribution
- According to new PF rules in EPF Contribution, all employees with earning salary less than Rs.15,000 are supposed to be provided mandatory EPF by employers. Earlier, the limit was Rs.6,500.
- Latest Minimum pension per month for retired employees now stands at Rs.1000. This amount is applicable to widow pension. Children pension is fixed at Rs.250 minimum and for orphans, it is Rs.750 per month.
- EPS contribution now stands at Rs.1250 as against the existing Rs.541 which the employers were mandated to pay earlier. The insurance coverage has been increased to Rs.3 lacs from a previous value of Rs1.56 lacs per employee.
History of EPF Interest Rates
Let’s have a Look at EPF Interest Rates History over the Last Few Years
| Year/Period | Interest Rate (p.a.) |
| 1952 – 1955 | 3.00% |
| 1955 – 1957 | 3.50% |
| 1957 – 1963 | 3.75% |
| 1963 – 1964 | 4.00% |
| 1964 – 1965 | 4.25% |
| 1965 – 1966 | 4.50% |
| 1966 – 1967 | 4.75% |
| 1967 – 1968 | 5.00% |
| 1968 – 1969 | 5.25% |
| 1969 – 1970 | 5.50% |
| 1970 – 1971 | 5.70% |
| 1971 – 1972 | 5.80% |
| 1972 – 1974 | 6.00% |
| 1974 – 1975 | 6.50% |
| 1975 – 1976 | 7.00% |
| 1976 – 1977 | 7.50% |
| 1977 – 1978 | 8.00% |
| 1978 – 1979 | 8.50% |
| 1979 – 1981 | 8.25% |
| 1981 – 1982 | 8.50% |
| 1982 – 1983 | 8.75% |
| 1983 – 1984 | 9.15% |
| 1984 – 1985 | 9.90% |
| 1985 – 1986 | 10.15% |
| 1986 – 1987 | 11.00% |
| 1987 – 1988 | 11.50% |
| 1988 – 1989 | 11.80% |
| 1989 – 2000 | 12.00% |
| 2000 – 2001 | 12.00% – till June 200111.00% – From July 2001 |
| 2001 – 2004 | 9.50% |
| 2004 – 2005 | 9.50% |
| 2005 – 2010 | 8.50% |
| 2010 – 2011 | 9.50% |
| 2011 – 2012 | 8.25% |
| 2012 – 2013 | 8.50% |
| 2013 – 2015 | 8.75% |
| 2015 – 2016 | 8.8% |
| 2016 – 2017 | 8.65% |
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