PF Calculator: How to Calculate Provident Fund Online

Posted by Arwind Sharma on June 14th, 2019

While there are various ways in which employers reward long-standing employment tenures of individuals, the Provident Fund is one of the common ways to do so. If you are wondering how the amount collected through your provident fund is going to aid you during retirement, you can use a PF calculator to ensure that you plan your finances well in advance.

What is Provident Fund?

What is Provident Fund? PF introduced by the government for the employees in the private sector or the government sector who are getting salaries every month to deduct a certain amount of money so that it could be used to sustain them after they retire from the job. It is a kind of fund managed by the government so that they could meet their need of money after retirement.

 There are two types of provident funds which are:

1. EPF ( employee provident fund)

2. PPF (public provident fund)

While EPF and PPF are both instruments controlled by the government,  the former requires a contribution from you as well as your employer, and the latter requires the contribution of income from only you.

How it works

In a provident fund, you have two contributors in which one is the employee itself and the other is the employer. The employees contribute 12 % of his salary and the employer has to contribute 12% plus some special causes which add another 1.61% to the contribution which makes the total contribution of 13.61% of the employee’s salary. The salary of the employee includes salary plus DA (Dearness Allowances). If the organization or company has less than 20 members then they are not eligible to apply for provident fund but if your company or organization has more than 20 members then you are allowed to apply for the provident fund scheme Once you have started contributing to the provident funds and your total strength falls below 20 members you cannot deregister and have to continue with the provident funds. Whatever the employee contributes to the provident fund the employer has to contribute the same amount but there is a bit of flexibility here in some cases. The payments have to be done on a monthly basis.

Conditions to apply for Provident Funds

To be eligible for this scheme you have to have a tenure of more than 10 years in the firm or minimum of 9 years and 6 months and a maximum of 33 years of service so that you can withdraw pension provident funds. But there is a clause which states that if you have a service tenure of more than 20 years then the provident fund department grants you 2 years of bonus. For example, if you have a tenure of 21 years so with this clause you can write your service as 23 years.

Formula for calculating pension provident fund

                                                (Average basic pay x service period)/70

In this, the average basic pay (average pensionable income) can’t be more than 15000 rupees according to amendments done on 14 September 2014. If the service period is considered as 35 years (33+ 2 years bonus)  which is the maximum then you would get 7500 rupees which sets a margin of maximum money which will be received and the minimum amount would be 1500 rupees which might change to 2000 or 2500 as discussions are going on about this change.

Using a PF Calculator

While individuals working for companies that fall under government sector get to avail pension benefits, individuals working in private companies often have to rely on the funds accumulated through their Provident Fund account. If you want to know the PF amount that would be accumulated over a period of time, you can easily use the PF calculator to do so. PF calculators can now be easily found online on many financing and banking companies’ websites. By choosing the right PF calculator and entering details such as monthly basic salary, contribution to PF account, employer’s contribution to PF, and the retirement age, you can easily get to know your PF balance.

You can use the PF calculator to identify the funds accumulated through your provident fund account, and plan your long-term investments from the early stages. One of the best ways to do so is by opening a Fixed Deposit account, which guarantees returns and safety of your savings. If you choose an NBFC like Bajaj Finance, you can also get a higher interest rate and flexible tenors for managing your FD account. Furthermore, Fixed Deposits are a great addition to your investment portfolio due to the safety and stability of returns that they offer. It can especially come in handy during your retirement wherein,  you can choose to avail returns at regular intervals through laddering of your FDs.