Why early EPF planning can make your retirement stress-free

July 5, 2025 Finance Talk Valli Sarvani

Retirement may seem far off when you’re in your 20s or 30s, but the earlier you start planning, the more secure your future becomes.

One of the most reliable and government-supported tools for salaried employees in India is the Employees’ Provident Fund (EPF).

It’s more than just a savings scheme; it’s a long-term financial safety net.

Managed by the Employees’ Provident Fund Organisation (EPFO), the EPF is designed to help employees in the organised sector build a solid retirement corpus through monthly contributions from both the employer and the employee.

Each month, 12% of your basic salary plus dearness allowance is deducted from your salary as your EPF contribution.

Your employer also contributes 12%, but only part of it, 3.67%, goes into your EPF account.

The larger share, 8.33%, is directed to the Employees’ Pension Scheme (EPS), which offers pension benefits after retirement or to your dependents in case of your demise.

To understand how your savings can grow over time, consider a scenario where your basic salary plus DA is ₹25,000 per month.

That would mean a monthly employee contribution of ₹3,000 and an employer EPF contribution of ₹917.5, bringing the total EPF contribution to ₹3,917.5 per month.

Over one year, this amounts to ₹47,010. If we assume no withdrawals and a constant interest rate of 8.25% per annum (the current rate for FY 2024–25), your money can grow significantly due to compound interest.

After 10 years, your EPF balance could reach around ₹7.45 lakh. If you continue for 15 years, the corpus might grow to ₹14.08 lakh.

And with 20 years of consistent saving, it can rise to approximately ₹23.09 lakh. These figures show how powerful steady contributions and compound growth can be.

EPF is not just about saving money; it’s about giving yourself peace of mind.

Early planning helps you retire without financial stress, and the EPF offers a stable, tax-free way to make that happen. Start now, and let time do the heavy lifting.

Image by Mohamed Hassan from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on September 24, 2018