With the Employees' Provident Fund (EPF), it is possible to build a large retirement capital. If your goal is to save 10 million rupees but you are not ready for high risks, EPF can be an optimal tool for you. This is a long-term investment that gives money enough time to grow.
With regular investments over a long period, the return on EPF remains high. With a monthly contribution of about 10,750 rupees to EPF over 20–25 years, one can accumulate a fund of approximately 10 million rupees.
However, this result is possible provided that the government continues to accrue an interest rate of 8.25% on the EPF balance. If an employee additionally contributes 6,000 rupees monthly to the Voluntary Provident Fund (VPF), then after 24–25 years, approximately 1.58 crore rupees can be saved.
It should also be noted that a career break can negatively affect the EPF fund. This happens because monthly contributions to the PF cease during a work break, which affects the effect of compound interest in the long term.
According to PF rules, employees are obliged to contribute 12% of their salary monthly to their account, and the company also makes a similar contribution. Of this, 8.33% of the company's contribution goes into the employee's pension scheme, and 3.67% goes into EPF.
EPF allows its members to partially withdraw funds in case of urgent financial need. An employee can withdraw money from PF for certain reasons, such as emergencies or advances.