Guides / EPF Explained: Contribution, Interest and Withdrawal

EPF Explained: Contribution, Interest and Withdrawal

EPF is a retirement fund built from a share of your salary and a matching share from your employer.

How contributions work

• You pay 12% of basic salary plus DA.
• Your employer also pays 12%. Part of this (up to ₹1,250 a month) goes to the pension scheme (EPS), and the rest to your EPF.
• Interest is set every year by EPFO. It was 8.25% in recent years.

What it can build

Suppose you are 30, with a basic salary of ₹50,000 growing 5% a year, retiring at 58, with 8.25% interest:

Run your own case in the EPF Calculator.

Withdrawals

• Partial withdrawals are allowed for certain purposes such as medical needs, home or marriage.
• Withdrawing before 5 years of continuous service can have tax consequences.
• EPFO has been simplifying its rules, so check the portal for the latest conditions.

Good habits

1. Do not withdraw when you change jobs. Transfer the account.
2. Link your UAN, bank account and Aadhaar.
3. Check your passbook yearly.
4. Consider a voluntary contribution (VPF) if you want a safe, higher saving.