You’re 25, just starting your career with a ₹20,000 salary. Retirement feels light-years away, right? But here’s the truth—the sooner you plan, the more secure your future will be. By the time you’re 60, will your savings be enough to live comfortably? Or will you be stressed about bills?
If you’re relying on EPF (Employee Provident Fund) and EPS (Employee Pension Scheme), you’re on the right track. But how much will you actually get when you retire? Let’s break it down in simple terms—no confusing jargon, just clear numbers.
How EPF & EPS Work Together
EPF: Your Tax-Free Retirement Corpus
Your Contribution: 12% of your basic salary + DA (₹20,000 × 12% = ₹2,400/month).
- Employer’s Contribution: Another 12%, but split into:
- EPS: 8.33% of ₹15,000 (max limit) = ₹1,250/month
- EPF: Remaining 3.67% of ₹20,000 = ₹1,150/month
- Total Monthly EPF Deposit: ₹2,400 (you) + ₹1,150 (employer) = ₹3,550/month
- Interest Rate (2024-25): 8.25% (compounded yearly).
- EPS: Your Monthly Pension After Retirement
Only your employer contributes ₹1,250/month (8.33% of ₹15,000). - After 35 years, this guarantees you a lifelong pension.
Your Retirement Fund After 35 Years
1. EPF Lump Sum Calculation
- Monthly EPF Deposit: ₹3,550
- Yearly Deposit: ₹42,600
- At 8.25% interest for 35 years: ≈₹68.9 lakhs (tax-free!)
Wait, how?
Thanks to compound interest, your money grows exponentially. Even small monthly deposits turn into a massive corpus over time.
2. EPS Monthly Pension Calculation
Your pension is calculated as:
Pension = (Years of Service × Average Salary) ÷ 70
- Years of Service: 35
- Average Salary: ₹15,000 (EPS cap)
- Monthly Pension: (35 × 15,000) ÷ 70 = ₹7,500/month
But is ₹7,500 enough in 2059?
Probably not—thanks to inflation. That’s why EPF’s lump sum is crucial.
Total Retirement Benefits
| Benefit | Amount |
|---|---|
| EPF Lump Sum | ₹68.9 lakhs |
| EPS Monthly Pension | ₹7,500 |
Combined Value Over 20 Years (Post-Retirement):
- Pension: ₹7,500 × 12 × 20 = ₹18 lakhs
- Total ≈ ₹86.9 lakhs
What If Your Salary Increases?
If your salary grows 5-10% yearly, your EPF could reach:
- 5% growth → ~₹1.2 crores
- 10% growth → ~₹2 crores+
But EPS stays capped at ₹15,000, so your pension won’t increase much.
FAQs
Q1. Can I withdraw EPF money before retirement?
Yes, but only for emergencies (job loss, medical crisis, home purchase).
Q2. What if I change jobs?
Your EPF balance transfers with you. Just update your UAN.
Q3. Is EPF better than a private pension plan?
Yes—it’s risk-free, tax-free, and employer-backed.
Q4. How is EPS pension calculated if my salary exceeds ₹15,000?
Only ₹15,000 is considered, regardless of your actual salary.