By Admin 
PF Retirement Fund: There are crores of PF account holders in the country and money is deposited in PF every month from the salary of most of the working employees. PF account is also considered a strong long-term savings plan. In this, 12 percent of the employee’s salary is deposited every month and the same contribution is also made by the company. This is the reason why a huge amount can be made in it over time.
Many people wonder how a big fund can be created by making a small deduction every month. But when this money keeps getting deposited for years and interest is also earned on it. So by the time of retirement this amount becomes quite big. If an employee continuously invests in PF on a salary of Rs 50 thousand and works for a long time. So at the time of retirement, a fund worth crores of rupees can be created. Know the complete calculation.
How does PF become a source of big savings?
To safeguard the savings of the employees, the Central Government has created the system of Employees Provident Fund Organization i.e. EPFO. This is considered a very important scheme especially for the employees working in the private sector. During job, money is deposited in PF every month and this amount later creates a big retirement fund.
- The most important thing about PF is that it includes the contribution of the company along with the employee.
- 12 percent of the employee’s basic salary goes into PF every month.
- The company also contributes the same 12 percent.
- That means overall 24 percent amount is deposited in the account every month.
- Annual interest fixed by the government is also available on this money.
This is the reason why this fund gradually turns into a huge amount on regular investment.
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How can a big fund be made on a salary of Rs 50 thousand?
If the monthly salary of an employee is around Rs 50 thousand, then a good amount of money can be deposited in his PF account every month. As salary increases with time, the amount going into PF also increases. This is the reason why the fund starts growing rapidly in the long run.
If we understand this calculation in a simple way then the situation could be something like this.
- Monthly salary should be considered to be around Rs 50 thousand.
- There should be an average increase of 6 percent in salary every year.
- Employees should start working at an early age.
- Every month the contribution of both employee and company should go into PF.
In these circumstances, the amount deposited over many years gradually increases and by the time of retirement this fund can reach crores.
The amount increases due to interest.
The biggest strength of PF account is the interest received on it. At present, around 8.25 percent interest is being given annually on PF. This interest keeps getting added to the deposited amount every year, due to which the total fund starts increasing rapidly.
If an employee starts investing in PF at the age of around 22 years and continues to contribute till retirement, then the amount deposited and the interest earned on it together can generate a huge amount.
- Continuous investment continues for a long time.
- The fund grows rapidly as interest is added every year.
- With increase in salary, the amount deposited in PF also increases.
Combined with all these aspects, one can create a corpus of more than Rs 5.5 crore by the time of retirement. This is the reason why PF is counted among the most reliable savings plans for retirement.
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