Here is a simple EPF corpus calculator derived out of the retirement calculator sheets. The corpus calculation is the same as any SIP calculator. Just that we need to factor in increasing contributions due to a salary increase and the correct total EPF contribution from salary.
The formula used for total contribution (employee+employer) has been taken from
The threshold has been increased from 6500 to 15000.
Thanks to Praveen, Suresh Narula, Ashish, Krishna Chandrashekar and Ramakrishna Sripathy for pointing out mistakes.
The formula used for corpus calculation:
The formula will 'blow up' if the salary increases at exactly 8.5% (the denominator will become zero). A simple workaround for this is to add 0.00001% to the denominator. Thanks to Chenthil Iyer for point out that it is better to assume that investments are made at the end of each year for a conservative estimate.
Thanks to AIFW members who clarified that only the basic salary is used for contributions in the private sector.
Here is a screenshot
Updated version: EPF Corpus Calculator with Contribution Schedule
Download the EPF Corpus Calculator
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Buy our New Book!You Can Be Rich With Goal-based Investing A book by P V Subramanyam (subramoney.com) & M Pattabiraman. Hard bound. Price: Rs. 399/- and Kindle Rs. 349/-. Read more about the book and pre-order now! |
Hi,
Total EPF contribution while calculating should be Employee Contribution + Employer Conribution rather than Employee Contribution * Employer Contribution used in excel sheet formula.
Also Employer contribution should be 12% - (pension component). If 3.67% is the pension contribution then PF contribution by employer should be 12-3.67 = 8.33%.
Can you clarify if I am missing something?
Regards
Praveen
Total EPF contribution is
12% of basic + 3.67% of basic.
This is what is used in the sheet and depicted in the above equation.
Hi,
Total EPF contribution while calculating should be Employee Contribution + Employer Conribution rather than Employee Contribution * Employer Contribution used in excel sheet formula.
Also Employer contribution should be 12% - (pension component). If 3.67% is the pension contribution then PF contribution by employer should be 12-3.67 = 8.33%.
Can you clarify if I am missing something?
Regards
Praveen
Total EPF contribution is
12% of basic + 3.67% of basic.
This is what is used in the sheet and depicted in the above equation.
PF contribution by employer in pension fund can go maximum up to Rs 1,250 per month subject to ceiling on basic pay of Rs 15,000 per month. If contribution makes by employer beyond this basic pay, it will go into employees' provident fund. Please update accordingly.
Thank you very much. I will update as you point out.
PF contribution by employer in pension fund can go maximum up to Rs 1,250 per month subject to ceiling on basic pay of Rs 15,000 per month. If contribution makes by employer beyond this basic pay, it will go into employees' provident fund. Please update accordingly.
Thank you very much. I will update as you point out.
+Praveen.
Employee contribution is 12% of Eligible. Employer's contribution is 12% of Eligible -- min(1250, 3.67% of Eligible)
Also should modify calculator to imply whether you need monthly current pay or annual.
+Ashish,
Yes it should not be 3.67% but 12%-3.67% while calculating the corpus.
The annual contribution is assumed to be invested at the end of the year, As this is only an estimate, don't want to include monthly option.
+Praveen.
Employee contribution is 12% of Eligible. Employer's contribution is 12% of Eligible -- min(1250, 3.67% of Eligible)
Also should modify calculator to imply whether you need monthly current pay or annual.
+Ashish,
Yes it should not be 3.67% but 12%-3.67% while calculating the corpus.
The annual contribution is assumed to be invested at the end of the year, As this is only an estimate, don't want to include monthly option.
Employer contribution to EPF corpus will be equal to 12% - pension contribution.
Pension contribution is set to maximum of Rs 541 earlier and now revised to Rs 1250.
Atleast this is how I have seen working for for private companies that I have worked for.
Not sure about govt and aided institutions and other private institutions.
Can you clarify on 3.67% and also below math?
(12*B7*B5*(1+(B6/B5))
Regards
As mentioned above, there are enough sources that say 3.67% of employer contribution goes to EPF and that is what is used in the sheet. Will implement Suresh Narula's suggesion.
3.67% is the contribution to pension fund and not EPF(provident fund).
Employer contribution to EPF as I mentioned is 12% - 3.67%. This 3.67% can go up to Rs 1500 per month now.
To make it even more useful you can add a seperate field for VPF (Voluntary contribution to Provident fund by employee in addition to EPF.
Please search online for " EPF 3.67%". VPF will vary and I do not want to factor it here.
Employees’ Pension Scheme (EPS) of 1995 offers pension on disablement, widow pension, and pension for nominees. EPS program replaced the Family Pension Scheme (FPS). It is financed by
diverting 8.33 percent of employer’s monthly contribution from the EPF(restricted to 8.33% of 6500 or Rs 541) and government’s contribution of 1.17 percent of the worker’s monthly wages.
You seem to have missed the finer details and interpretation of this.. Here it says EPS is restricted to maximum of 8.33% of 6500. This comes to Rs 541 which I mentioned earlier which infact has been revised to Rs 1250 monthly or Rs 15000 now.
Now if 12% of your salary is more than 6500, after allocating Rs 541 for EPS entire remaining amount is diverted towards EPF. So this 8.33% or 3.67% is based on Rs 6500/- minimum EPF contribution by employer.
This percentages change based on the number (12% of your salary component considered for EPF).
So your excel sheet needs to be modified to take into account these considerations.
Hope this helps.
You can check the second illustration in below link where the salary is more than Rs 7500 if you still not clear after reading my earlier reply.
http://www.bemoneyaware.com/blog/epf/
I give up. I knew it was a terrible idea for me to get into EPF. I have now updated the sheets with specific entries for the exact contributions. Let me know if this will work. Thanks for your inputs.
Your comment about "lease search online for ” EPF 3.67%”." made me google and I got to know some more information regarding eligibility and the amount of pension received today.
So thanks to you for this article
I have not rewritten the sheet to include the new threshold and 3 methods of calculating employer contribution (as you mentioned earlier). Please see if it is in order. Thanks for your inputs.
Employer contribution to EPF corpus will be equal to 12% - pension contribution.
Pension contribution is set to maximum of Rs 541 earlier and now revised to Rs 1250.
Atleast this is how I have seen working for for private companies that I have worked for.
Not sure about govt and aided institutions and other private institutions.
Can you clarify on 3.67% and also below math?
(12*B7*B5*(1+(B6/B5))
Regards
As mentioned above, there are enough sources that say 3.67% of employer contribution goes to EPF and that is what is used in the sheet. Will implement Suresh Narula's suggesion.
3.67% is the contribution to pension fund and not EPF(provident fund).
Employer contribution to EPF as I mentioned is 12% - 3.67%. This 3.67% can go up to Rs 1500 per month now.
To make it even more useful you can add a seperate field for VPF (Voluntary contribution to Provident fund by employee in addition to EPF.
Please search online for " EPF 3.67%". VPF will vary and I do not want to factor it here.
Employees’ Pension Scheme (EPS) of 1995 offers pension on disablement, widow pension, and pension for nominees. EPS program replaced the Family Pension Scheme (FPS). It is financed by
diverting 8.33 percent of employer’s monthly contribution from the EPF(restricted to 8.33% of 6500 or Rs 541) and government’s contribution of 1.17 percent of the worker’s monthly wages.
You seem to have missed the finer details and interpretation of this.. Here it says EPS is restricted to maximum of 8.33% of 6500. This comes to Rs 541 which I mentioned earlier which infact has been revised to Rs 1250 monthly or Rs 15000 now.
Now if 12% of your salary is more than 6500, after allocating Rs 541 for EPS entire remaining amount is diverted towards EPF. So this 8.33% or 3.67% is based on Rs 6500/- minimum EPF contribution by employer.
This percentages change based on the number (12% of your salary component considered for EPF).
So your excel sheet needs to be modified to take into account these considerations.
Hope this helps.
You can check the second illustration in below link where the salary is more than Rs 7500 if you still not clear after reading my earlier reply.
http://www.bemoneyaware.com/blog/epf/
I give up. I knew it was a terrible idea for me to get into EPF. I have now updated the sheets with specific entries for the exact contributions. Let me know if this will work. Thanks for your inputs.
Your comment about "lease search online for ” EPF 3.67%”." made me google and I got to know some more information regarding eligibility and the amount of pension received today.
So thanks to you for this article
I have not rewritten the sheet to include the new threshold and 3 methods of calculating employer contribution (as you mentioned earlier). Please see if it is in order. Thanks for your inputs.
At the risk of sounding greedy, can I make a request. The EPF calculator in the below link offers a lot of value add. However it has not been updated to reflect the change in the contribution to EPS. If the yearly contributions and amount at end of each year could be listed, it would be a fantastic tool. I know I might be asking a bit too much. Buy hey if u dont ask u dont get. Posting the link for reference. https://www.personalfn.com/tools-and-resources/financial-calculators/EPFCalculator.aspx
Happy to do this. Please have a look at the updated sheet. Had to do that considering the differing opinions on the contributions. Let me know what exactly needs to be done and I will do it. Not hard at all but I need the rules clearly spelt out to me. Recall I know nothing about EPF. Thanks.
Pratheek, have now modified the sheet considerably. Please have a look.
At the risk of sounding greedy, can I make a request. The EPF calculator in the below link offers a lot of value add. However it has not been updated to reflect the change in the contribution to EPS. If the yearly contributions and amount at end of each year could be listed, it would be a fantastic tool. I know I might be asking a bit too much. Buy hey if u dont ask u dont get. Posting the link for reference. https://www.personalfn.com/tools-and-resources/financial-calculators/EPFCalculator.aspx
Happy to do this. Please have a look at the updated sheet. Had to do that considering the differing opinions on the contributions. Let me know what exactly needs to be done and I will do it. Not hard at all but I need the rules clearly spelt out to me. Recall I know nothing about EPF. Thanks.
Pratheek, have now modified the sheet considerably. Please have a look.
Thanks Pattu, I think the link https://www.personalfn.com/tools-and-resources/financial-calculators/EPFCalculator.aspx offers a value add of showing contributions, results for each year. For e.g. if i give 30 years, it shows me a table which lists corpus and contribution for each year from now to the end year. This particular link has not been updated to the current EPF logic ( 15 % of 15000 + 3.67 % 15000). Could you take a look at this link plz. It might be simpler.
Sir, the corpus can also be calculated using the following functions
Corpus = FV(int, years, 0, -current balance - PV((1+int)/(1+inc)-1, years, annual contribution,0,0)/(1+inc))
PV internally takes care of the case of 'int' being equal to 'inc'
And in case of payment at beginning of the period it translates to
Corpus = FV(int, years, 0, -current balance - PV((1+int)/(1+inc)-1, years, annual contribution,0,1))
Thanks. I am aware of this and make use of it. I appreciate the formula more than the function.
🙂