RetirementFinancial Glossary
EPF (Employee Provident Fund)
Definition
A mandatory retirement savings scheme for salaried employees in India where both employee and employer contribute 12% of basic salary plus dearness allowance. The employee's entire 12% goes to EPF, while the employer's 12% is split between EPF (3.67%) and EPS (8.33%). Currently earns 8.25% annual interest.
Why It Matters
EPF is often the largest retirement asset for Indian employees, yet many do not realize its power. A basic salary of Rs 30,000 with 12% contribution from both sides means Rs 7,200 per month going into EPF. At 8.25%, this accumulates to over Rs 1 crore in 25 years. Never withdraw EPF when changing jobs — transfer it.